#### The President and Directors of the State Bank v. F. C. Armtsrong, admr. of John Armstrong, et. al.

Where a dealer with a hank had a balance to his credit upon a general cash account, and died indebted to it by judgment, and upon simple contract, the bank has a right, independent of the statute of set off, to api ply the balance to the latter debt.

This was an action of D ebt upon a judgment obtained by the plaintiffs against the intestate of the defendant •Armstrong in his life time, and the other defendants, the latter being in fact his sureties. The judgment declared on was g3046. The only dispute between the parties arose upon the plea of payment, and upon a notice of a set off tor the sum of 0930, given at the trial before Seaweed Judge, at Cumberland on the last circuit.

Sundry payments were admitted by the plaintiffs, and a verdict was taken for 03136,14, to, be reduced to the sum of 01855,80, if the Court should be of opinion that the defendants were entitled upon the following facts, to have the sum of $9SO applied to the judgment declared on, either as a payment or a set off.

John Armstrong was clerk of the county court of Cumberland, and kept his cash with the plaintiffs, at their office, in Fayetteville, and dealt with them as depositors usually do with their bankers. (Some particulars of the mode in which this dealing was conducted is contained in the opinion of the court, and need notbe here stated.) Of the cash thus deposited with the plaintiffs, the suni of 0930 never had been paid .to Armstrong in his life time, neither had he ever made any specific application thereof to this, or to any other debt he owed the plaintiffs. Armstrong died on the 20th of July 1827, and his administrator on the 19th of September following, called at the banking house of the plaintiffs, and drew a check for the balance abovementioned, and demanded its payment to him. This was refused by the cashier, who assigned as a reason therefor, that Armstrong owed the plaintiffs a large sum for money paid into his office in bis life time, upon executions in their favor, and that he *520bad been directed to retain the balance at the credit of Armstrong on account of this money. Armstrong did in O , J tact owe the plaintiffs, tor money received by him as clerk, the sum of §2300, anil two or three weeks before his death had, upon being called on by the cashier of the plaintiffs for payment, promised to come to the banking house and settle the amount, but had never done so.— The administrator never made any other demand for the said sum of §930, neither had he ever given any directions to the plaintiffs as to its application.

On the 22d of October 1827", the plaintiffs sued out process upon the official bond of Armstrong assigning as a breach thereof the non-payment by him of the sum of §2300 abovcmentioncii. On the trial of this action they allowed the defendant credit for the sum of §930, the balance of Armstrong's cash account, and the sum now in dispute. But his administrator who was the sole defendant, did not consent to this credit, on the contrary he expressly declared his dissent thereto, and notified the attorney of the plaintiffs that he should insist upon applying it as a part satisfaction of the judgment on which this action was brought. This notice was disregarded by the plaintiffs who took judgment only for the balance claimed by them after deducting the said sum of §930.

Directly after the demand made by the administrator for the payment of the said sum of §930, he brought an action of assumpsit against the plaintiffs for its recovery, in which he was non-suited at the Fall term 1829, of Cumberland Superior Court. Ho immediately brought another action for the same sum, in which he was again nonsuited at the Fall term 1832 of the same court; within a year thereafter he sued out a third writ for the same sum, which was returnable to the term of the court when this suit was tried, and which was, at the trial, in the hands of the Sheriff.

His Honor was of opinion, “ that it belonged exclu- “ sively to the defendant, the administrator of Armstrong, to avail himself of the benefit of the deposit, “ and that it was not in the power of the plaintiffs, who *521“were to be regarded as debtors to that amount, to say in “ what maimer they were to pay it, except in an action ., __ ,. ' , , . ,.~ “ against them to recover it. Here the Bank was pi am till a j-0 pecover a debt due to it, and it belonged to thedefen- “ dant to avail himself or not of tiie deposit, and conse- “ qucntly he miglit exercise his election as to what cross demand he would apply it. That if he could not ap“ply it as a set off, the conduct of the Bank in refusing “payment of it, it being a debt duo from it, loft it in bis “ power, if he thought fit, to treat from that moment, “ the money paid to the Bank on deposit, and thus re-fused to bo repaid, as a payment to whatever demand “ the Bank had against him, and that he had the right — to assert it by jilea when sued. Therefore the deposit “ must be allowed either as a set off or payment.”

Judgment being entered accordingly, the plaintiffs appealed.

Henry and TV. II, Haywood for the plaintiffs.

Badger contra.

Haston, Judge.'

The plaintiff brought an action of debt against the administrators of John Armstrong, Thomas Armstrong, John Hodges, William Hodges, and Robert Campbell, to recover the amount of a dormant judgment which had been rendered in tbeir bebalf against tlic intestates of these defendants. The matters in controversy were embraced in the issue joined on the jileas of payment and set off. Upon these issues the jury returned a verdict ascertaining the. balance due on the judgment, subject to the opinion of the Court upon a case agreed. This case presented the question whether, upon the facts agreed, the defendants were, or were not entitled to a further credit of the sum of $9S0, which was claimed by them, but not allowed in the verdict_ Upon this question the decision of the Court below was in favor of the defendants, and a judgment having been rendered for the plaintiffs for the residue of the sum mentioned in the verdict after deduction of this credit, they appealed to this court,

The material facts in relation to the disputed credit *522arc briefly these. The late John Armstrong for many years before bis death kept an open account with the plaintiffs as his bankers. lie died on the 27"th July 1827, and on the face of this account there was then a balance in his favor of the aforesaid sum of S930. About a fortnight before'his death, he was called on by the plaintiffs to account with, and pay over to them moneys which the Sheriff of fhe county had paid over to him as clerk of the county court, for the plaintiffs. He promised to do so, but died without accounting or making payment, The sum due to the plaintiffs on this account was S2-100. Besides this debt, he also owed jointly with the persons herein before named, the large judgment which is the foundation of this action. Neither of these debts was charged in the running account. On the 19th September 1827, bis administrator applied at the Bank, presenting a check in favor of himself for the sum of §930, and domauded payment thereof. The officers of the institution refused to pay this check, and claimed the right to apply the balance appearing due to bis intestate to the satisfaction pro tanto of what bis intestate owed, because of the money of the Bank received from the Sheriff. The administrator/immediately thereupon commenced an action of assumpsit against the Bank, and on the trial thereof was called and nonsuited. He renewed the action, and upon the trial was again nonsuited. He then issued a third writ which has not yet been executed on the plaintiffs. On the 22d day of October 1827, the plaintiffs instituted an action on the official bond of Armstrong, which was-tried at the same term with this suit, and obtained a judgment for the residue of the money so received by him as clerk after a deduction of the sum of §930, which they applied in part discharge of that claim. This application of the said sum was not assented to, hut on the trial was protested against by the administrator. On the 23d of July 1829, the present suit was brought.

A debt due t* one of several defendants by the plaintiff, cannot be pleaded as a setoff.

It is clear that the disputed credit cannot be allowed ™ , ... as a set off, waiving ail other objections to it as such, there is a want of that mutuality between the debt de- ", manded and the debt which the defendants opposed to it, *523which is indispensable under the statute of set off. A which is due from a plaintiff to one defendant only, cannot be set off to a joint demand against two or more defendants.

It remains to be considered whether upon the facts agreed, the law pronounces that this sum of $980 has been paid in part satisfaction of the judgment which is the. foundation of this action. Whatever claim the late John Armstrong had against the plaintiffs, it arose not from special but from general deposits. He had not placed in the custody of the officers of the Bank, money in bags or boxibs to be kept distinct from the funds of the Bank and to be returned to him in specie. Had this been the case the identical money so deposited, would have remained his property in their-hands as his bailees. If lost or destroyed without fault of the depository the loss would be that of the depositor. If not so lost or destroyed,.he would have had a remedy against the plaintiffs upon an improper refusal to return it, by detinue or trover,as for an unlawful detention of conversion of his proper goods. The deposits were general.

They consisted, (as appears from the account made a part of this case,) either of money, or of the notes of the Bank, or of notes of other Banks, or of the checks of other dealers upon the Bank, or of the proceeds of bills or notes discounted ñ r him. They were incorporated into themase of the funds of the plaintiffs, became their property, and entitled him to a general credit for the amount thereof in account. Upon a settlement, the plaintiffs were bound honestly to account with him for that amount, and faithfully to pay over any balance which on such settlement should be found rightfully due. They were undoubtedly entitled to charge him with whatever sums they had paid to him, or to his checks to others, and with such other disbursements and demands, as by the agreement of the parties, or by the nature of their dealings, or by the known usages of the institution, or by the law of the land, were proper debits in such a running account. Had the plaintiffs the right as against Armstrong, upon his refusal to pay over to them monies which he had received to their *524Use, to charge this in the account to the extent of his funds in Bank ? 'There can be no question but if the Bank had paid off a note or acceptance of his, payable at the Bank, this would have constituted a proper debit in the account. It is not to be doubted also, but that they had a right to apply his funds in their hands to the payment of any note or acceptance of his,held by them. (Rogers v Ladbroke, 1 Bingham 93, 8 Eq. C. L. Rep. 260.) Upon the examination of the account referred to, we find that the very first debit is, “June 3d 1819 to note 180,” and that regularly afterwards, so long as he obtained discounts, that is to say,’up to April 22d 1827, his notes are charged off in account, as they become due, or as his means in Bank by discounts or otherwise become adequate to meet them. We see also that according to the course of dealing between the pax-ties, he is charged in account with other money demands, as for example, “ Januai-y 27th 1827, Brown & Cameron’s judgment $5610 25.” From the nature of this account, as an open running account of the cash transactions of the parties, embracing a variety of receipts and payments, debits and credits, from the manner of their dealing with each other, and upon common law principles wholly independent of the statute of set off, we think that either has a right to retain for, or to charge in account against the othei*, money l-eceived by the latter for the use of the former, so that the balance thus ascertain* ed shall be the true debt, and the parties neither di-iven to cx-oss actions nor obliged to set of, against each other, as for mutual unconnected demands. (Dale v Sollet, 4 Bur. 2143, Green v Farmer, Ib. 2221.) But if the -decision of the question x-ested upon this point we should consider it further before we come to a definitive determination. We can decide it more satisfactorily to ourselves upon other grounds which I proceed to state.

It is not questioned that if Armstrong had demanded payment from the Bank of this apparent balance in his favox-, the Bank could refuse upon the ground of the set off which they had against him, because of their money received from the Sheriff, and had he. attempted by ac*525tion of assumpsit to enforce a recovery of this balance, cou^ have barred his recovery by pleading this set; off As Armstrong’s administrator succeeded precisely to the rights of bis intestate, whatever was the rule of right as between the plaintiffs and the intestate, became the rule also between the administrator and the plaintiffs. But while this is conceded,it is denied by the defendants that the plaintiffs could apply this balance as a payment on account of this particular demand, without the assent of Armstrong or his administrator, because the two demands were unconnected, originating and continuing in distinct transactions, forming opposite debts, recoverable by separate and opposing actions, and not permitted to balance each other, except by a judgment of court rendered with respect to them when brought forward under the defence of set off. If this bo indeed the rule which governs the transaction, and by the force of which the plaintiffs Cannot apply the money due to Armstrong’s estate, as .a payment of the demand they have against it for the money Armstrong held of theirs, we are unable to see how under the same rule these defendants can, without the assent of the plaintiffs, apply the former demand as a payment of the judgment upon which they are sued. There is at least as little connexion between the disputed item and this judgment, as between that item, and the demand against Armstrong for the money paid him. In fact there is much less, because as we have seen,the two last arc not even mutual demands, and cannot be opposed to each other upon the plea of set off by the defendants.

The argument by which the defendants endeavour to sustain this their asserted right, is understood to be this: the money standing on the running account to the credit of Armstrong at his death, was the money of his administrator, and he had the right to apply it as he pleased. The refusal of the Bank to let him have the control of this money,gave him an election to consider it as cash paid to the Bank. There were two demands ofthe plaintiffs against his intestate, and of course against the dministrator as the representative of that intestate. A *526debtor malting a payment, has the right to apply the sum paid, to either of the demands of the creditor, and the debtor here, by the plea of payment to this action, lias directed the application to this debt. Wo have felt ourselves bound to consider this argument attentively, not only, because of the respect due to the able counsel who argued it, but because of the still greater respect due to the decision which is supposed to sanction it, and which the appeal brings before us for review. The result of that examination has not been to satisfy us of the correctness of the argument.

Tlio bataneo of a general cash account, duo by a Bank to a depositor, is a debt which may ha set off to any claim of the bank against the depositor, and is not money which the latter may apply at his election, to cither of those claims.

However for some purposes the phrase may be allowed, that the balance on the running account in favour of Armstrong at his death, was the money of his administrator, we have seen that legally speaking, it was not his money. Such balance was evidence that the plaintiffs owed that amount to the administrator* and a refusal to pay it upon demand, unless such refusal were made for sufficient reason, rendered the plaintiffs liable to the administrator, because oF a breach of the assump-sit which the law infers from such indebtedness. Ifthe claim of the plaintiffs against the administrator were so connected with this balance appearing due on open account, that both were items in one continued dealing, then the refusal to pay was rightful, because in truth there was nothing due. If however these mutual claims were unconnected, the plaintiffs had a right to refuso payment, because they had a proper set-off. A debtor who makes an actual payment with his own money lias a right to direct its application, because it is his money, and be alone lias the legal control over it. But a creditor has no right to direct his debtor to apply the sum due him to any one of two cross demands which that debtor may have against the creditor. The money in the hands of the debtor is yet his money, he has the legal control of it — its specific application cannot be ordered by the creditor, and the right of opposing a set-off, and if so, of selecting the set-off which be will thus oppose, is the right of the debtor. We do not therefor^ see that the refusal of the Bank to favor the administra» *527tor’s check, gave him a right to regard the sum checked for, still less the whole apparent balance, as so much money then paid to the Bank.

If this view be correct it is unnecessary to pursue the train of reasoning further. A fallacy we think has insinuated itself into it at its commencement, which unavoidably leads to error in the result. But if the administrator could be regarded as having the right to consider-the money standing to the credit of his intestate as a payment to the Bank, and of directing its application— when ought he, and when did he direct the application ? The judgment of the Court is, that it was thus applied oh the 19th September 1827, because of the refusal of -the Bank then to pay his check, and of the election declared by him at the time of the plea pleaded. The record shews that the plea of payment was first put in at June Term 1832. There appears no plea referring distinctly to this disputed item until at the term of trial, when the administrator of John Armstrong pleads fully administered, and “gives notice of a set off for g930.” It is perfectly clear, that in fact the administrator did not direct the application of this disputed item as a payment on the 19th of September 1827. He presented a check for $902 payable to himself. The Bank refused the check, because they claimed the right of retaining for the satisfaction of one of their demands. It was not a controversy for which of the two demands the Bank should retain, but whether it might,retain for their claim against John Armstrong, or should not, retain at all.

The application of this balance to the judgment debt was not urged, nor so far as we see, thought of by either. If the refusal of the Bank gave him the right to direct the application, he did not then exercise that right. Instead of imputing this amount to either of the demands of the plaintiffs, he required it tó bo paid over to himself. It is not stated as a fact, nor is there any fact set forth from which it can be inferred, that the administrator treated this as a payment by him, or by his intestate, or claimed that it should be so regarded for several years afterwards. He immediately instituted an *528action to recover this amount as a debt due him from the plaintiffs, and after repeated nonsuits, he to this day,perseveres in claiming it as a debt. If the occurences at the time the check was refused, either of themselves, or connected with the election at the time when, payment was pleaded to this action, can convert the amount withheld by the Bank, into a payment, then it must be regulated by the law applicable to such a payment, that is to say, a payment by a debtor to a creditor having two demands, without any direction as to its appropriation. In such case, the rule is settled, that tiic creditor may then make such appropriation as ho pleases.' "VVe are saved from the necessity of enquiring how the law would have applied it, in case both the debtor and creditor had at the time declined to make an appropriation, (an enquiry which in many cases is not free from perplexity,) because the election of the plaintiffs, was expressly announced at the moment, and has ever since been invariably adhered to.

I am instructed to declare the judgment of this court, that the court below erred, in rendering a judgment in behalf of the plaintiffs for the sum of eighteen hundred and fifty five dollars and eighty cents — that the said judgment ought to be reversed on account of this error — and that the plaintiffs are entitled to have judgment pursuant to the verdict of the jury, for the sunt of three thousand, one hundred and thirty-six dollars and fourteen cents, and their costs in the court below, with interest on *82314 50 cents, from the time of the rendition of the judgment in the Superior Court of Cumberland, until paid.The appellants are also entitled to recover their costs in this court, to be taxed by the clerk.

Per Curiam — Judgment accordingly.