Opinion
No. 30903.
January 22, 1934.
1. SALES.
In action upon account, defendant had burden of proving defense of payment.
2. PAYMENT.
Plea of payment is plea of confession and avoidance, and must be supported by preponderance of evidence.
3. PAYMENT.
Payment must be made in money, unless creditor has expressly or impliedly agreed to accept something else.
4. CUSTOMS AND USAGES.
Parties to transaction are bound by custom of particular locality or general custom in relation to subject-matter of transaction, where parties know of custom in fact or by implication and understand it to be law of their actions.
5. CUSTOMS AND USAGES.
In action upon account, whether lumber company had authorized payment of account by permitting offset of personal account of manager against company's account held for jury, where there was evidence that company had implied notice of such custom of offsetting accounts.
APPEAL from Circuit Court of Bolivar County.
J.C. Feduccia and W.B. Alexander, Jr., both of Cleveland, for appellant.
The receipt as produced in this case makes out the defendant's defense of payment as prima facie evidence.
21 R.C.L., sec. 136, p. 123.
An examination of the record will show that Germany was called as an adverse witness by the plaintiff and through him knowledge of the receipt was brought out into evidence; and from that point on no attempt was made to contradict or overbalance the prima facie case made out by the defendant when the receipt was first introduced.
McLeod v. Citizens Bank of Live Oak, 56 So. 192; 30 Cyc., "Payment," 1223-1226.
A receipt is evidence of payment of the highest and most satisfactory character.
Connelly v. Sullivan, 119 Ill. App. 469; Winchester v. Grosvenor, 44 Ill. 425; Dugan v. Harris, 9 Ky. L. Rep. 599; Borden v. Hope, 21 La. Ann. 581; Crawford v. Forest Oil Co., 189 Pa. St. 415; Jenne v. Burger, 120 Cal. 444, 52 P. 706; Levi v. Kerrick, 13 Iowa 344; Raymond v. Roberts, 16 Am. Dec. 701; Fuller v. Crittendon, 23 Am. Dec. 367.
As a receipt is prima facie evidence of payment the production thereof imposes upon the plaintiff the burden of going forward with the evidence to impeach the receipt.
48 C.J., secs. 80 and 81, pp. 637 and 639; Eufaula National Bank v. Passmore, 102 Ala. 370, 14 So. 684; Lumpkin v. Rose, 198 Ala. 533, 73 So. 896; Agnew v. McGill et al., 11 So. 538; Price v. Hendricks, 92 So. 431.
The defendant's plea of payment may have cast upon him the burden of proving payment, but when the receipt was produced, a prima facie case was made out, and while the burden of proof may not have shifted, the burden of going forward with the evidence devolved upon the plaintiff.
48 C.J., sec. 83, p. 641; 48 C.J., sec. 76, p. 634; Steffens v. Nelson, 102 N.W. 871.
Where a principal has placed his agent in such a position with reference to a note and mortgage that a person with ordinary prudence, conversant with business usages, is justified in presuming him authorized to collect the amount due, payment to him discharges the obligation.
Harrison National Bank v. Austin, 101 A.S.R. 639; Halle v. Brooks, 96 So. 341; American Mortgage Co. v. King, 16 So. 889; Mortgage Co. v. Peoples, 14 So. 656; Ginn v. Security Co., 8 So. 388; Brecht v. McParland, 41 A. 378; Birmingham Mineral R. Co. v. Tenn. Coal, etc., R. Co., 28 So. 679; Little Rock, etc., R. Co. v. Wiggins, 46 S.W. 731; Heinz v. American Nat. Bank, 47 P. 403 ; Germania Life Ins. Co. v. Bouldin, 100 Miss. 660, 56 So. 609; T.G. Bush Bro. Co. v. Conley, 61 Fla. 131, 55 So. 867; 10 R.C.L., sec. 83, p. 765; 2 L.R.A. 808; 52 L.R.A. (N.S.) 571; Meyer, Weiss Co. v. Wiley Morgan, 51 Miss. 21, 24 Am. Rep. 617; 21 R.C.L., sec. 109, p. 930; Raymond et al. v. Palmer, 41 La. Ann. 425, 6 So. 693; 21 R.C.L., sec. 11, p. 932; Taylor Meyers v. J.R. Conner, 41 Miss. 722; Southern State Fire Ins. Co. of Birmingham v. Kronenberg, 199 Ala. 164, 74 So. 63; Roberts Son v. Williams et al., 198 Ala. 290, 73 So. 502; Southern Railway Co. v. Beaty, 103 So. 658; Wheeler v. McQuire et al., 86 Ala. 398, 5 So. 190; 2 C.J., p. 493, sec. 113; Hall v. Chicago, etc., R. Co., 48 Wis. 317, 4 N.W. 325.
Shands, Elmore Causey, of Cleveland, for appellee.
The plea of payment is under our statute in the nature of a plea of confession and avoidance, and is an affirmative defense.
Sively v. Williams, 112 Miss. 276; 48 C.J., sec. 160, p. 675; 21 R.C.L. 119.
Germany having admitted owing the entire amount, part of which is the fifty-three dollars and one cent, but which he claims to have paid, we submit that appellant had, or has, the burden of proof to show such payment as will discharge him from liability for the debt.
Greenburg v. Saul, 91 Miss. 410; 48 C.J., "Payment," sec. 160, p. 675; 21 R.C.L. 119.
A payment in order to be effective to discharge an obligation, must be made to the obligee himself, or to an agent having authority, either express or implied, to receive the particular payment. In any case a payment to an agent is binding on the principal only to the extent of the agent's authority to receive it. And the burden thereof rests on the party making payment to show that the one receiving payment was authorized to do so.
21 R.C.L., Payment, sec. 13, p. 19; 48 C.J., Payment, sec. 18, p. 684; Wellford Withers v. Arnold, 162 Miss. 786, 794.
To be evidence of payment, the receipt must be one executed by the creditor, or his agent authorized to give a receipt.
48 C.J., Payment, p. 636, sec. 78; 21 R.C.L. 858.
The foundation of the whole doctrine of usage or custom, when applied to the dealings of men, is, that they are presumed to deal with each other, in reference to the known customs which have immemorially prevailed, either in that particular locality or everywhere, in relation to the subject matter of their dealings, and they are, therefore, presumed to intend that such customs shall be the law of their action. It must be an established custom existing at the time and place of their dealing, and known to the parties. It must be certain, uniform, reasonable, and not contrary to law.
Shackelford v. New Orleans Great Northern Ry. Co., 37 Miss. 203; W.F. Cross et al. v. M. Levy Co., 2 Miss. Dec. 116.
We submit that if Frith is not shown to have had authority, under any theory advanced by appellant to accept his individual personal account in part payment by Germany of the sum of fifty-three dollars and one cent, the amount herein involved, that Virden Lumber Company, principal, is not bound by such act on the evidence of this record, then as Germany does not know how much was paid in cash, and how much was paid in account, the burden of proof on the payment issue is not met, and the peremptory instruction for plaintiff was proper.
Wellford Withers v. Arnold, 162 Miss. 787.
A receipt is not evidence that a payment was made to an authorized person.
Heiskell v. Curtis, 259 Fed. 987; 48 C.J., "Payment," sec. 80, p. 638; Dennis v. Sanger, 39 S.W. 997; Star Loan Association v. Moore, 55 A. 946.
Argued orally by J.C. Feduccia, for appellant, and by Dugas Shands, for appellee.
Appellee brought this action in the court of a justice of the peace of Bolivar county against appellant on an account assigned to it by M.L. Virden Lumber Company, in the sum of fifty-three dollars and one cent. There was a trial resulting in a judgment in that court in favor of appellant. From that judgment appellee appealed to the circuit court, where there was a trial de novo, resulting in a judgment in appellee's favor. From that judgment appellant prosecutes this appeal.
M.L. Virden Lumber Company was a partnership with its principal place of business in Greenville in this state. It was engaged in the sale of lumber and building materials and, in connection therewith, constructing buildings. It had several branches for carrying on its business, one of them being in Shaw in Bolivar county. J.E. Frith was in charge of its office at Shaw. He was authorized to sell the lumber and building materials of his principal and to collect and give receipts therefor, and in the process of collection to endorse checks to his principal; he was also authorized to make building contracts in the name of and for his principal.
M.L. Virden Lumber Company had an auditor, R.T. Love, who went around two or three times a year to the lumber company's different branches and audited their books, accounts, and transactions. In January, 1931, he audited the branch business at Shaw and found Frith short with the lumber company in the sum of several hundred dollars. Appellee had made a fidelity bond for Frith for the benefit of the lumber company, guaranteeing his honesty in the conduct of the affairs of the company. M.L. Virden Lumber Company thereupon made proof of Frith's shortage, presented it to appellee, and appellee allowed it and paid it. Thereupon the lumber company assigned to appellee, in order to enable the latter to reimburse itself as far as it could, its claim against Frith for such shortage and certain accounts due it in Shaw and vicinity by persons who had purchased building materials at that place through Frith, and which the lumber company claimed had not been collected by Frith; among these claims was the one here sued on for fifty-three dollars and one cent. Upon demand appellant refused payment of the claim upon the ground that he had paid it to the lumber company through Frith while the latter was in charge of its Shaw branch. When Frith was found short the lumber company discharged him and put another man in his place. Appellant admitted that he had owed the account sued on but claimed he had paid it. In other words, his defense was payment.
On the trial only two witnesses testified, appellant and the lumber company's auditor, Love, and they were introduced as witnesses by appellee. While on the witness stand, appellant testified that he had paid the account sued on in full to Frith, and presented a receipt signed by Frith, acknowledging its payment. This receipt was written on a sheet of paper containing the letterhead of the lumber company, but was only signed "Frith." The testimony given by both appellant and Love tended to show that this was the usual form of receipt given by Frith for the lumber company. Appellant testified that he did not know how much of the fifty-three dollars and one cent was paid in cash and how much was paid by Frith for him by "butting accounts." He explained what he meant by "butting accounts" as follows: Appellant was the proprietor of, and conducted, a drug store in Shaw; from time to time Frith purchased goods from appellant's store on credit; these purchases were not entered on appellant's books, but the amounts were charged on tickets; appellant at different times had bought materials through Frith from the lumber company's Shaw branch; these purchases were charged by Frith on the books of the company kept by him; when Frith made his rounds collecting for the lumber company, he would sometimes find that appellant was indebted to the lumber company, and he (individually) indebted to appellant; when this occurred they would offset the accounts against each other, Frith agreeing to pay the lumber company the amount due it by appellant. In other words, Frith would pay his account with appellant, in so far as it would go, with what appellant was due the lumber company, and appellant would pay his account with the lumber company, in so far as it would go, with Frith's account with him.
Appellant's testimony tended to show that this was a custom at the lumber company's Shaw office. As to the particular account sued on, fifty-three dollars and one cent, for which appellant held the lumber company's receipt, he was unable to remember how much, if any, of this amount was paid by "butting accounts" in the manner stated. He admitted that part of it might have been paid in that manner and part in cash.
The lumber company's auditor, Love, testified that in auditing the branches of the company he had at different times come across accounts of various persons indebted to the company which had been settled in this manner. Appellant testified that he had settled, in that manner, some of his other accounts with Frith for his principal. Love used this language: "What Mr. Frith would do, would take the customer's accounts that he owed, he would give him credit for it and charge it to his (the manager's) personal account, at the end of the month would offset his personal account from his monthly salary. Frith and several of them have done that. The fact of the business, it has been customary to a certain extent in all the lumber yards." He testified further that he did not know of the lumber company making any objection to its manager "swapping accounts" in this manner.
All the evidence of this custom was objected to by appellee and ruled out by the court. The court sustained appellee's motion to exclude all the evidence and direct a verdict for it.
The burden of proof was upon appellant to establish his defense of payment. His original liability for the account was not in issue. The plea of payment is a plea of confession and avoidance. It seeks to avoid the confession of original liability by showing its payment, and this must be shown by a preponderance of the evidence. Sivley v. Williamson, 112 Miss. 276, 72 So. 1008; Greenburg v. Saul, 91 Miss. 410, 45 So. 569; 48 C.J., sec. 160, p. 675; 21 R.C.L., p. 119. Payment must be made in money, unless the creditor has either expressly or impliedly agreed to accept something else. The evidence showed without conflict that appellant had paid the account sued on to Frith. The receipt he held from the lumber company showed that, but he admitted on the witness stand that a part of it might have been paid, not in money but by "butting accounts," as above set out. That being true, appellant failed to meet the burden of proving payment, unless such a method of payment was either expressly or impliedly authorized by the lumber company. Appellant undertook through his own evidence and through that of Love, the auditor of the lumber company, to show that that manner of payment was impliedly authorized by the lumber company; that it was a common course of dealing with its customers.
As stated, this evidence was ruled out by the court. Appellee contends that there was no error in ruling it out because it failed to meet the requirements of the law. To sustain its contention appellee relies upon the principles laid down in Shackelford v. New Orleans, Jackson Great Northern R.R. Co., 37 Miss. 203; Hart v. Foundry Co., 72 Miss. 809, 17 So. 769; 21 R.C.L., p. 856. Those principles are that the doctrine of custom and usage, in order to be binding upon persons in their dealings with each other, must be shown to have prevailed in the particular locality or generally in relation to the subject-matter of their dealings, and that, therefore, they intended and understood that such custom should be the law of their actions. The custom or usage must be known to them either in fact or by implication. The evidence tended to show that this usage and custom of "butting accounts" had been carried on at all the different branches of the lumber company, and the lumber company had never made any objection to it. Love's testimony indicates that the lumber company either knew of it, or could have known of it with any sort of diligence. In other words, that the lumber company was affected with at least implied notice of the custom.
It follows from these views that we think it was a question for the jury whether the lumber company authorized the settlement of this account in the manner in which the evidence indicated it was settled.
Reversed and remanded.