An undated cheque is payable on demand, and if not presented CH. XXIII. within 6 years after it was given, will be statute barred (d). s. 1. Defences (Payment). And if it appear that the defendant has drawn a cheque on his banker, payable to the plaintiff or bearer, and that the plaintiff or Payment by his agent has actually received the money thereon; this will be chequeevidence of payment, without proof that the plaintiff received such cheque from the defendant (e). So where K., the agent of the plaintiffs S. & Co.,—having authority to sell goods for them, and to receive payment by cash. or cheque,―received from the defendants, in payment for goods supplied, a cheque on their bankers, payable to S. & Co. or order; and K. fraudulently indorsed the cheque, and having received the proceeds from the defendants' bankers, misappropriated them this was held to be a good payment by the defendants to the plaintiffs (f). But the mere fact of the plaintiff having, at the time of action brought, a cheque drawn in his favour by the defendant on account of the debt sued for, will not operate as payment of that debt, unless the cheque be unconditional (g); but while the cheque is outstanding there is no debt owing or accruing (h). If money be sent by post, in a letter properly directed to the creditor (i), and be lost, the debtor is discharged, if he were directed so to transmit the money (k), but not otherwise (1); and a direction so to transmit will not be inferred from a long series of similar transmissions unobjected to, as was held by the Court of Appeal in Pennington v. Crossley (1), in which a Bradford wool merchant had for 20 years been paid by cheque for wool supplied to a Halifax carpet manufacturer, and a cheque sent by post but not received was dealt with by a stranger who had forged the indorsement. But a direction to transmit by post will be inferred from a mere request for a cheque, as was held where a London milliner sent an account to a Suffolk customer with a notification that "a cheque within a week will oblige" (m). The decisions are applications of the rules (1) that the debtor must come and pay his creditor, paying him in a particular way only if authorised to do so (n), and (2) that a letter duly posted (d) In re Bethell (1887), 34 Ch. D. 561. (e) Mountford v. Harper (1847), 16 M. & W. 825. (f) Charles v. Blackwell (1877), 2 C. P. D. 151, C. A. (g) Hough v. May (1836), 4 A. & E. 954. (h) Elwell v. Jackson (1884), C. & E. 362, per Denman, J. (i) See Walter v. Haynes (1824), Ry. & M. 149. (k) Warwicke v. Noakes (1791), 1 Peake, 98; 3 R. R. 653. (1) Pennington v. Crossley (1897), 77 L. T. 43, C. A., reversing Grantham, J. (m) Norman v. Ricketts (1886), 3 T. L. R. 182, C. A., affirming Huddleston, B., 2 T. L. R. 607. (n) See per Lord Esher in Norman v. Ricketts, ubi sup. contd. Money sent by post. Pennington v. Crossley. CH. XXIII. is constructively received as addressed, although not received s. 1. Defences (PaymentTime, place, and mode). Post-office order. Half-notes. Forged notes. Creditor's debtor to pay Debtor's order on a third person to pay creditor. in fact (o). Where the defendant, in answer to a demand for payment, sent a post-office order to the plaintiff, in which he later was described by a wrong Christian name; and the plaintiff kept the order, but did not cash it, although he was informed at the post-office that he might receive the money at any time, by signing it in the name of the payee it was held that this was no evidence of payment (p). So, the fact of the defendant having remitted to the plaintiff, the first halves of Bank of England notes for the amount, will not, per se, operate as payment (g). If a payment be made in forged Bank notes, the creditor may treat them as a nullity, and sue his debtor for the amount. Where the defendant is indebted to the plaintiff, and the plaintiff is indebted to A., and the three agree that the plaintiff shall be discharged from the debt due from him to A., and that the defendant's liability to the plaintiff shall be transferred to A.; this agreement may be pleaded by the defendant as a discharge, in an action against him for the debt due from him to the plaintiff (r). But if a debtor refer his creditor to a third person for payment, intending such third person to pay in money; and the creditor, instead of taking payment in money, take payment in any other way, he does so at his peril (s). Thus, where a creditor, who held the debtor's order upon a banker, instead of taking cash from the banker, as he might have done, elected to take from the latter a bill upon a third person, payable at a future day; it was held that this discharged the debtor, although the bill was afterwards dishonoured (t). So it has been held, that if a debtor refer a creditor to a third person for payment, and the creditor give that third person indulgence, without the knowledge and consent of the debtor; and the third person become insolvent, the loss must fall on the creditor; because, as between himself and the debtor, the giving indulgence, without notice, operates as an agreement on his part to look to the third person and discharge the debtor (u). And where a creditor accepts the order of his debtor upon a third person, to pay him, the creditor, a sum of money, and holds it an unreasonable time before demanding payment; and the person on whom the order was given becomes insolvent, the creditor must bear the loss, even although the order was not negotiable (x). amount in banker's It was decided in Eyles v. Ellis (y), that an actual transfer of Transfer of the amount of a debt, in a banker's books, from the account of the debtor to that of the creditor, with the assent of both, is books. equivalent to payment; but where a debtor directed his bankers, who had a balance in his favour in their hands, to place a certain. sum to the credit of his creditor, who was a customer of and debtor to the bank so as to make the payment the same as by a bill at one month from that date; and the bankers assented and communicated their assent to the creditor, who also acquiesced; but before the expiration of the month, and before credit was in fact given for the money in their books, the bankers failed: this was held to be no payment (z). Money of a third party coming to plaintiff's hands, applied by So, if the plaintiff and defendant and a third person agree, that a sum of money belonging to such third person, but which is to come to the hands of the plaintiff, shall, when received, be applied by the plaintiff in discharge of a claim which he has against the defendant; and it appears that the money was duly received by arrangement in payment the plaintiff; these facts will furnish evidence of a payment by of debt. the defendant in satisfaction of such claim (a). And so where the plaintiffs, being the holders of the joint and several promissory note of A. and B., received from C. a promissory note of the like amount, in satisfaction of B.'s liability on the former note; and C.'s note was afterwards paid by D.: it was held that these facts amounted to a payment by B. of such former note (b). for the So where, on each half-year's settlement for rent between a Money paid landlord and his tenant, the landlord's sewers rate, which had been paid by the tenant, was allowed as a part payment of the rent by the tenant, and a receipt given for the balance, expressing it to be such; this was held to place the parties in the same position, as if the amount had been actually paid in money to the landlord (c). If parties account with each other, and sums are stated to be Settlement due to an equal amount on each side of the account, and the (x) Chamberlyn v. Delarive (1767), 2 Wils. 353. (y) Eyles v. Ellis (1827), 4 Bing. 112; and see Bodenham v. Purchas (1818), 2 B. & Al. 39. (z) Pedder v. Watt (1796), Peake, Ad. Ca. 41; S. C., 2 Chit. 619. It will be observed that, in this case, there was no remittance or actual transfer on account of the debt; but a mere direc tion to place money to account at a (a) Hills v. Mesnard (1847), 10 Q. B. (b) Thorne v. Smith (1851), 10 C. B. 659; and see Parker v. Watson (1853), 8 Exch. 404, 409. (c) Waller v. Andrews (1838), 3 M. & W. 312, 318; Bramston v. Robins (1826), 4 Bing. 11, 14. of mutual accounts. accounts are settled by both parties, this is the same as if the sums on both sides had been paid (d). So the allowance of cross-demands, on an account stated between the plaintiff and the defendant, and payment of the balance by the latter, is a good payment of the entire claim (e). As a general rule it is the debtor's duty to seek and find the creditor if he be within the realm of England (ƒ), and the creditor need not demand payment before commencing action, unless there is a stipulation for payment at a particular place (g). (f) Appropriation of Payments. The rule of Clayton's case (h) is that the first option of appropriation of a payment belongs to the debtor, and the second to the creditor, the option to be declared at the time of payment; but that if no express declaration be made by either, either a presumption arises in favour of the debtor, or if the debts be equal in their nature, in favour of the debt first incurred. But the rule does not apply to a case where there is no account current between the parties, nor where from an account rendered or other circumstances it appears that the creditor intended, not to make any appropriation, but to reserve the right, which he may exercise up to the last moment (i). The doctrine-as to the right of a creditor to appropriate general payments-holds, although one of the debts be due on a bond or other specialty, and the other be due on simple contract (k). So, where the defendant owed money to the plaintiff, in respect of a debt contracted by his, the defendant's wife, dum sola, and also in respect of a debt incurred by him on his own account, and he paid money generally on account: it was held (d) Per Mellish, L.J., Spargo's case (1873), L. R., 8 Ch. 407, 414. (e) Per Cur., Callander v. Howard (1850), 10 C. B. 290; and see Perry v. Attwood (1856), 6 E. & B. 691; Smith v. Page (1846), 15 M. & W. 683; Sutton v. Page (1846), 3 C. B. 204. (f) Co. Litt. 210 a-212 b, §§ 340343, and see Robey v. Snaefell Mining Co. (1887), 20 Q. B. D. 152. (g) Thorn v. City Rice Mills (1889), 40 Ch. D. 357. (h) Clayton's case (1816), 1 Mer. 605; 15 R. R. 161, per Grant, M. R. The case was one of a set of eight arising out of the death of a partner in the bankinghouse of Devoynes & Co., and the bankruptcy of the surviving partners who carried on the business without changing the firm. See Bodenham v. Purchas (1818), 2 B. & Al. 39, at p. 45; 20 R. R. 342, at p. 346; Field v. Carr (1828), 5 The French law is to the same effect as ours, as to the right of the debtor at the time he pays, to direct to what account the money shall be applied; except that when a payment is made on account of a debt bearing interest, the money must be placed to the account of interest then due, and not to the account of principal. Code Civil, bk. 3, tit. 3, art. 1253, 1254. See 1 Pothier on Obl., by Evans, 368. (i) Cory Brothers & Co. v. Owners of Turkish Steamship "Mecca," [1897] A. C. 286, reversing judgment of C. A., which had affirmed that of Bruce, J. (k) See cases cited supra (h). that the plaintiff might apply the payment to either demand (l). And so, in the absence of any appropriation by the debtor at the time of making a payment, the creditor may apply it in satisfaction of a debt which is barred by the Statute of Limitations (m). appropriation This rule, however, applies only to the case of payments When properly so called. And therefore, if the money was received allowed. by the plaintiff without the knowledge of the defendant, so that he never had the power of exercising the option which the law allows him; the right of the plaintiff, which would accrue upon the defendant's failure to appropriate, does not arise (n). But it is not essential that there should have been an express declaration by the debtor at the time of the payment, as to the account to which he intended such payment to be applied. Such intention may be proved either by the previous or by the subsequent declarations of the debtor (o). And even in the absence of any declaration on the subject, it may be collected from other circumstances, that the debtor intended, at the time of the payment, to appropriate it to a specific account (p). Nor will an entry in the books of the creditor, applying a payment to a particular demand, preclude him from afterwards applying it to another demand, unless such entry has been communicated to the party paying (q). There are cases, however, in which, although a payment be general, the creditor is not allowed to apply it to which account he pleases. Thus, where one account is with the debtor as executor, and the other in his own right, the law will apply the payment to the money due from himself individually, and will not allow the creditor to appropriate it to the other demand (1). So it has been held, that a general payment must be applied to a prior legal debt, and not to a subsequent equitable demand, as, for instance, to a claim by a partner against his co-partner (s). The doctrine of appropriation does not authorise a creditor who receives money on account, to apply it towards the satisfaction of what does not, nor ever did constitute any legal or equitable demand against the party making the payment (t). (1) Goddard v. Cox (1743), Str. 1194. Semble, that notwithstanding the Married Women's Property Act, 1882, the creditor would still have this right. (m) Mills v. Fowkes (1839), 7 Scott, 444. (0) Waters v. Tomkins (1835), 2 Cr., M. & R. 723. (p) Per Lord Ellenborough, C.J., Newmarch v. Tealby (1811), 14 East, (g) Simson v. Ingham (1823), 2 B. & (r) Goddard v. Cox (1743), Str. 1194. (s) Goddard v. Hodges (1832), 1 C. & M. 33. (t) Lamprell v. Guardians of Billeri cay Union (1849), 3 Ex. 283, 307. Express de- the debtor Creditor not concluded by entry not communi cated. Cases where creditor can not appropriate a general payment. Creditor cannot apply payment to irrecoverable demand. |