Opinion
No. 33178.
April 25, 1938.
1. PAYMENT.
A debtor may determine how payment to creditor shall be applied.
2. LANDLORD AND TENANT.
Where tenant delivered check to landlord bearing notation showing that it was for 1931 rent, and landlord indorsed and cashed check, landlord could not recover on note for 1931 rent, whether 1930 rent was due when check was delivered, whether landlord read notation on check, and whether tenant stated check was for 1931 rent.
3. EVIDENCE.
Where tenant delivered check to landlord bearing notation showing that it was for 1931 rent, landlord, by indorsing check, consummated contract that payment should be applied according to notation, and such contract could not be varied by parol evidence.
4. EVIDENCE.
In action on note for rent, evidence in regard to tenant's offer to compromise was inadmissible.
APPEAL from the circuit court of Bolivar county. HON. WILLIAM A. ALCORN, JR., Judge.
Shands, Elmore, Hallam Causey, of Cleveland, and Marcus L. Kaufman, of Rosedale, for appellant.
We are familiar with the line of cases, such as Enochs v. Delta Cotton Oil Co., 139 Miss. 234, 104 So. 92, and other cases of similar import, to which we shall subsequently call attention, in which it appeared that the creditor had accepted from his debtor a check, with a notation on it, containing the words: "In payment of debt in full" or words of similar import, in which cases the court held that the acceptance of such a check precluded the creditor from undertaking to collect any further sum on the debt. But it will be observed by reading those cases that the creditor accepted the check knowing that it was tendered in full settlement of the debt.
The intention of the parties should be ascertained, and in the case at bar, as in all such cases, the intention of the parties have said, and done, and after a consideration of all of the facts and circumstances connected with the case.
Ingram v. Suset, 209 P. 699.
Even where a debtor contends that his creditor has accepted performance of his (the debtors) obligation, in a manner different from that previously agreed by them, it is necessary that the debtor plead and prove that the parties have made a substituted agreement, which the debtor has performed.
Clayton v. Clark, 74 Miss. 499, 21 So. 565, 22 So. 189.
There must not only be shown an acceptance of the amount of money tendered by the debtor, but there must be shown an agreement by the parties to accept the lesser sum as full performance of the obligation, which is another way of saying that the creditor has knowledge of the proposition submitted by his debtor, and by acceptance concurs in the offer, or that the minds of the parties should meet with reference to the manner of performance submitted by the debtor.
Cooper v. Railroad Co., 82 Miss. 634, 35 So. 162; Darrill v. Dobbs, 78 Miss. 912; Newcomb v. Home Trust Co., 169 Miss. 883, 151 So. 158; Y. M.V.R.R. Co. v. Sideboard, 161 Miss. 4, 133 So. 669; A. Greener Sons v. P.W. Cain Sons, 137 Miss. 33, 101 So. 859.
We do not think it can be seriously contended that the creditor must have knowledge of the terms upon which his debtor has offered to pay the debt. Such knowledge is essential, so that the minds of the parties may meet on the terms offered by the debtor. In all of the foregoing cases, where a debtor has tendered to his creditor a check with the words, "In full payment to date," or words carrying a similar meaning, the evidence was uncontradicted that the creditor knew that the check had been tendered in full settlement of the debt. In the case at bar, according to appellee's testimony, the appellant had knowledge that the check was tendered in settlement of the 1931 rent only, but according to appellant's testimony he had no such knowledge, which we think made this a case to be submitted to a jury.
The acts of the parties subsequent to the giving of the $2900 check show that they did not consider that the check settled the 1931 rent.
Southern Coal Co. v. Barnett, 279 S.W. 192; Duncan v. F.A. Hihn Co., 148 P. 971; Beattie Mfg. Co. v. Heinz, 97 S.W. 188; Perryman v. Bear Mfg. Co., 29 F.2d 835.
A jury question was presented as to the intention of the parties, and as to whether appellant knowingly accepted the check with a condition attached to it, that it should be applied exclusively to the payment of the 1931 rent.
Rapp v. Giddings, 57 N.W. 237; Butler, County Treasurer, v. State for use of Franklin County, 81 Miss. 734, 33 So. 847; 48 C.J. 637.
As to whether a creditor has made settlement with his debtor, by means of a receipt, or a check, or by any other means, is a question of intent.
Blanchard v. Edenton Peanut Co., 108 S.E. 332; Mercer v. Lbr. Co., 173 N.C. 49, 91 S.E. 558; Stovall v. Lampton Co., 174 Miss. 58, 164 So. 39; Lapp-Gifford Co. v. Muscay Water Co., 134 P. 989; Everhardy v. Union Finance Co., 1 P.2d 1024; Woin v. Anaconda Copper Mining Co., 43 P.2d 663; Knight v. Wolpert, 290 S.W. 933; Stephenson Brick Co. v. Bessemer Engineering Co., 118 So. 570; Ellis v. Mansfield, 256 S.W. 165; Noyes v. Kendrick, 293 S.W. 296; Morton v. Siebler Clothing Co., 153 N.E. 227; St. Pierre v. Peerless Cas. Co., 92 A. 840; Pike v. Buzzell, 76 A. 642; Armstrong v. Lonon, 63 S.E. 101; Aydlett v. Brown, 69 S.E. 243.
We also contend that a jury question was presented as to the application of the payment of the $2900.
Light v. Stevens, 113 P. 659; Bishop v. Hart, 86 N.W. 218.
Sillers Roberts, of Rosedale, for appellee.
The rule is well settled in Mississippi and elsewhere that a debtor making a payment has a right to direct its application.
Carberry v. Howell, 114 Miss. 549, 75 So. 383; Champenois v. Fort, 45 Miss. 355; Crisler v. McCoy, 35 Miss. 445; Baine v. Williams, 10 S. M. (18 Miss.) 113.
Appellee had the privilege and right to direct the application of the $2900 payment on any indebtedness which he desired, and it was not necessary for him to secure the consent of appellant before he did so. It is not a question of an agreement between the parties, or a meeting of the minds as to how the application is to be made, but it is a privilege which the debtor had a right to exercise, and when exercised, the application is final. If the creditor is unwilling to apply the payment as directed by the debtor his only alternative is not to accept the payment at all. He has no right to apply the payment on any debtedness except that to which the debtor directs.
When appellee handed appellant the $2900 check with notation "for rent Walton Place 1931" on it, and appellant accepted, endorsed and cashed the check, it constituted an accord and satisfaction of the 1931 rent.
City of Columbia v. Foxworth, 159 Miss. 728, 132 So. 451; Y. M.V.R.R. Co. v. Sideboard, 161 Miss. 4, 133 So. 669; A. Greener Sons v. P.W. Cain Sons, 137 Miss. 33, 101 So. 859; Clayton v. Clark, 74 Miss. 499, 21 So. 565, 22 So. 189, 37 L.R.A. 771, 60 A.S.R. 521; Darrill v. Dodds, 78 Miss. 912, 30 So. 4; Cooper v. Railroad Co., 82 Miss. 634, 35 So. 162; May Bros. v. Doggett, 155 Miss. 849, 124 So. 476; Phillips v. Ins. Co., 156 Miss. 41, 125 So. 705; Blue Ribbon Creamery v. Monk, 168 Miss. 130, 147 So. 329; Rucker v. King Const. Co., 159 Miss. 387, 131 So. 872; Enochs v. Delta Cotton Oil Co., 139 Miss. 234, 104 So. 92.
Parol evidence is not admissible to vary the terms of the check.
Section 2841, Code of 1930; Section 2763, Hemingway's Code; Bank of Gulfport v. Smith, 132 Miss. 63, 95 So. 785; Restatement of the Law of Contracts, sections 6, 7 and 10; 7 Am. Juris. 788; Greenlee v. Hardin, 157 Miss. 229, 127 So. 777; Bay v. Schrader, 50 Miss. 326; 8 C.J. 191; 7 Am. Juris. 816.
The receipt in the case at bar is contractual and cannot be varied by parol proof.
A. V.R. Co. v. Kropp, 92 So. 691; English v. N.O. N.E.R.R. Co., 100 Miss. 575, 56 So. 665; Orgill Bros. Co. v. Polk, 155 Miss. 492, 124 So. 649.
Negotiations between appellant and appellee had in November of 1936 were for a compromise and settlement of all of the differences between the parties and were not admissible in evidence.
Shell Petroleum Corp. v. Eagle Lbr. Supply Co., 158 So. 331, 171 Miss. 539; Federal Land Bank of New Orleans v. Robinson, 160 Miss. 546, 134 So. 180; Atlantic Life Ins. Co. v. Serio, 171 Miss. 726, 157 So. 474; Houston v. Keith, 100 Miss. 83, 56 So. 336; McNeer Dodd v. Norfleet, 113 Miss. 611, 74 So. 577; 22 C.J. 308.
Aaronson, the appellant, brought an action at law in the circuit court of Bolivar county against McGowan, the appellee, to recover a balance claimed to be due on a note, interest, and attorney's fees; copy of the note being exhibited therein. The appellee pleaded the general issue and payment of the note, and notice thereunder, exhibiting with the notice a copy of the check.
On the trial of the case the court heard the evidence of Aaronson, and his contention that the check in question had been accepted by him without his seeing a certain memorandum thereon, and that certain admissions had been made by the appellee some years later, when the parties attempted to adjust their differences.
The note sued upon with credits thereon, is as follows: "$2900.00
"For value received, on the 1st day of November, 1931, I promise to pay to M. Aaronson, or Bearer, Twenty-nine Hundred and no/100 Dollars, and interest thereon at the rate of 6 per cent per annum from maturity until paid, payable annually, with ten per cent attorney's fees upon both principal and interest, if this note be placed in the hands of an attorney for collection. This note is for rent on H.B. Walton Plantation in Bolivar County, Mississippi, for the year 1931. Demand, Presentment, Notice and Protest waived and payment guaranteed. Negotiable and payable at Valley Bank, Rosedale, Miss.
"[Signed.] H.H. McGowan.
"Endorsed on back: Sept. 24, 1931, Received $1,000.00, One Thousand Dollars, balance due $1900.00.
"M. Aaronson."
The check claimed to have been delivered to Aaronson by McGowan in payment of that note is as follows: "Beulah, Miss. Oct. 24, 1931. Bank of Beulah 85-275. Pay to the order of M. Aaronson, $2,900.00, Twenty-nine Hundred and no/100 Dollars. For rent Walton Place 1931. (Signed) H.H. McGowan. Ennis Tag Co., Ennis, Texas. (Bank of Beulah Paid Nov. 21, 1931, Beulah, Miss.) (Endorsed on back) M. Aaronson."
McGowan testified that he delivered the check to Aaronson in the latter's store about a week before it was due, with the following statement to him, "I told him I wanted to pay my 1931 rent note, presented a check to him," and handed him the check; that Aaronson told him (McGowan) that he had misplaced that note. On cross-examination McGowan denied that he owed any balance on the 1930 rent. His bookkeeper testified that it was his custom to enter on checks for large amounts a memorandum to disclose the purpose for which the check was issue, and that the memorandum on the check, "For rent Walton Place 1931," was made thereon by him with a typewriter, on the day of its date.
Aaronson testified that he leased his Walton place to McGowan, taking notes for the annual rental of $2,900, due November 1st for each of the years 1929, 1930, and 1931; that McGowan paid the rent for 1929, and that for 1930 McGowan only paid $1,000 on the rent note, leaving a balance due of $1,900; that McGowan came to his store and handed him the check in question, stating that it was in payment of the rent; that he did not recall seeing the words, "Rent Walton Place 1931," on the check — he did not scrutinize the check, but placed it in his pocket, and they talked of other matters; he did not think to look at the check at all. His recollection of what occurred is as follows: "He (McGowan) just handed me; says, this is the check for the rent." Aaronson credited $1,900 of the proceeds of the check, which he admits he indorsed, as in payment of the balance due on the 1930 note, crediting the remainder of $1,000 on the 1931 note. He denied that he told McGowan he had misplaced the 1931 note; he retained the 1930 and 1931 notes to the date of this trial, not delivering either note to McGowan.
Aaronson further testified that in 1936, at a time when McGowan owed him, according to his contention, $1,900, balance on either the 1930 or 1931 note, and the rent for the year 1932, just after the compromise, details of which it is unnecessary to set forth, McGowan did not then dispute that he owed him a balance of $1,900 on the 1931 rent note. The amount at this time agreed upon in settlement of the entire controversy was less than $1,900. But on the cross-examination with reference to the 1936 incident, this question was asked:
"And the controversy that you all were having then was for the amount that you claimed was due for the rent, for the years 1930, 1931, 1932 — isn't that a fact, for those three years, and this amount that he was to pay you would be in full settlement of all of that liability? A. Well, I don't know —
"Q. Nothing was said? A. About what it was paid; but just payment for what he owed me.
"Q. I see; payment for what he owed you? A. He was talking about the $1,900.00. I had paper on it; but the other, I had no paper on it, but I had something to show for it. Well I didn't have anything to show for 1932.
"Q. But any settlement that you all made would have been in settlement of all the controversy between you and Mr. McGowan? A. Yes, sir."
At the conclusion of the evidence for the appellant the court sustained a motion to exclude it, and directed the jury to return a verdict for the appellee, which was done, and judgment was entered accordingly.
In this state there is no question of the right of the debtor, upon payment of money to his creditor, to determine how that payment shall be applied. See Carberry v. Howell, 114 Miss. 549, 75 So. 383; Champenois v. Fort et al., 45 Miss. 355; Crisler v. McCoy, Adm'r, 33 Miss. 445; Baine v. Williams, 10 Smedes M. 113. It is indeed difficult to conceive how a debtor could more specifically have directed a payment on his debt than is to be found in the method adopted by McGowan in the case at bar. He gave Aaronson a check for the amount of the rent note due for the year 1931, in the sum of $2,900; and entered on the check above his signature, "For rent Walton Place 1931," payable to M. Aaronson. The check was indorsed on the back, "M. Aaronson"; this made a complete written memorandum, equivalent to a contract between the parties, that Aaronson would so apply the payment. See Bay v. Shrader, 50 Miss. 326; 7 Am. Juris. 816.
Whether, when the check was tendered, McGowan used the words, "Here is a check for the rent," or, as he testified, "Here is a check for the rent for the year 1931," is in our opinion of no moment, and not worthy of consideration. The fact that Aaronson testified that he did not see the notation on the check — that he did not scrutinize the check — is of no consequence. There was nothing in the action, or in the language which he attributed to McGowan, to indicate any fraud, scheme, or mistake, or that McGowan in any manner whatsoever misled him. Fornea v. Goodyear Yellow Pine Co., Miss., 178 So. 914, and authorities there cited.
Applying the parol evidence rule to the admission of his evidence in so far as it affected the written contract, the contract was complete when Aaronson agreed thereto by indorsing this check. If, in truth, he did not read the check, it was his own negligence, of which he cannot now avail himself. If McGowan only said to him, "This is a check for the rent," one would ordinarily understand that it was a payment on that which was due or about to become due, especially in dealings between landlord and tenant. But the written memorandum on the check, as to which there is no issue of fact in this record, we think is conclusive, and cannot be varied by parol evidence, which rule applies here in all its rigor. If McGowan had written a letter to Aaronson, telling him that he desired the check for $2,900 to be applied to the note for rent for that year, he could not have made it any plainer than by making the memorandum on the check. When Aaronson indorsed this check, with or without reading it, it became binding upon him, as notice to him that the debtor had directed the application of the payment on the 1931 rent note.
As to the alleged admissions made in 1936, in the effort to settle, we need only consider that McGowan was trying to effectuate a settlement for the 1932 rent, amounting to $2,900, and $1,900 balance on the 1930 note, or the 1931 note. We do not think the evidence for Aaronson, especially when elaborated on cross-examination, shows any admission, except such as would follow from any effort by parties to compromise their differences. The evidence in regard to the offer to compromise was incompetent, and does not alter the situation. See 22 C.J. 308; Atlantic Life Ins. Co. v. Serio, 171 Miss. 726, 157 So. 474; Shell Petroleum Corporation v. Eagle Lumber Supply Co., 171 Miss. 539, 158 So. 331; Federal Land Bank of New Orleans v. Robinson, 160 Miss. 546, 134 So. 180; Houston v. Keith, 100 Miss. 83, 56 So. 336.
The statement attributed to McGowan in the so-called admission, as detailed above, was, in fact, a mere conclusion, and not a statement of a fact.
We think no error was committed in the court below.
Affirmed.