U.S. Supreme Court Mayor of Alexandria v. Patten, 8 U.S. 4 Cranch 317 317 (1808)
Mayor of Alexandria v. Patten
8 U.S. (4 Cranch) 317
ERROR TO THE CIRCUIT COURT OF THE
DISTRICT OF COLUMBIA AT ALEXANDRIA
If the debtor at the time of payment does not direct to which account the payment shall be applied, the creditor may at any time apply to which he pleases.
Error to the Circuit Court of the District of Columbia, sitting at Alexandria, in an action of debt brought by the mayor and commonalty of Alexandria for the use of John G. Ladd against Thomas Patten and his sureties on a bond given for the performance of his duty as vendue master.
The object of the suit was to recover a sum of money alleged to remain in his hands as vendue master on account of goods sold for Ladd. Patten was also the debtor of Ladd for goods sold by him to Patten, who gave in evidence payments which exceeded the amount due upon the latter account, and which, if applied to the former account, would nearly if not entirely discharge that debt. The payments were attended by circumstances which the defendants considered as evidence of a clear intention to apply them to the debt due from Patten as vendue master,
"Whereupon the counsel for the plaintiffs prayed the opinion of the court whether, from the manner in which the payments were made as aforesaid, the said John G. Ladd had not a right to apply so much of the money, paid to him as aforesaid, as would discharge the debt due to him as aforesaid for goods sold as aforesaid to the said Thomas Patten to the discharge of the same. Whereupon the court instructed the jury that if it should be satisfied by the evidence that the payments of the money by the defendant Patten were
made on account of the goods sold at vendue, and so understood by both parties at the time of the payments, they must be applied to that account."
"If Mr. Patten, at the time of paying the money, did not direct to which account it should be applied, and if it was not understood by the parties at the time of payment on which account it was made, the plaintiff had a right immediately to make the application to which account he pleased; but such application must have been recent and before any alteration had taken place in the circumstances of Mr. Patten."
"If neither of the parties made the application as aforesaid, and if the parties did not then understand on which account it was made, then the payments ought in law to be applied to the discharge of the vendue account, the nonpayment of which is alleged as the breach of the bond upon which the present suit is brought."
To this opinion the plaintiffs excepted, and the verdict and judgment being against them, brought their writ of error.
MR. CHIEF JUSTICE MARSHALL, stating the case, delivered the opinion of the Court as follows:
It is a clear principle of law that a person owing money on two several accounts, as upon bond and simple contract, may elect to apply his payments to which account he pleases; but if he fails to make the application, the election passes from him to the creditor. No principle is recollected which obliges the creditor to make this election immediately. After having made it, he is bound by it, but until he makes it, he is free to credit either the bond or simple contract.
Unquestionably circumstances may occur, and perhaps did occur in this case, which would be equivalent to the declaration of his election on the part of the debtor, and therefore the court was correct in instructing the jury that if it should be satisfied that the payments were understood to be made on account of the goods sold at vendue, they ought to apply them to the discharge of that account; but in declaring that the election, which they supposed to devolve on the plaintiff if the application of the money was not understood at the time by the parties, was lost if not immediately exercised, that court erred.
Their judgment therefore must be
Reversed and the cause remanded for a new trial.