
    J. H. LEE v. W. H. MANLEY.
    (Filed 1 March, 1911.)
    1. Debtor and Creditor — Payment—Application.
    When the debtor owes two debts, one secured and one not secured, his right to direct the application of a payment made to the creditor must be exercised at the time the payment is made.
    2. Same — Change—Consent of Debtor.
    If a debtor fails at the time of payment to direct its application when he owes the creditor a secured and an unsecured debt, the creditor may apply it to either debt, or a part thereof to one and the remainder to the other; and when the application of the payment is once made by the creditor, the assent of the debtor is necessary for him to then change it.
    3. Debtor and Creditor — Payment—Application by Law.
    When the debtor owes the creditor two debts, one secured and one not secured, and makes the creditor a payment without directing it to either debt, and the creditor himself does not make the application, the law will apply the payment to the unsecured' debt.'
    4. Debtor and Creditor — Mortgage—Proceeds—Payment—Application — Question for Jury.
    When the debtor owes a debt secured by a chattel mortgage, and another debt not secured, and makes payment to his creditor, with a part of the proceeds of the property secured by the mortgage, of which the creditor was aware, the execution of the mortgage was an application of the payment upon the debt it secured, which the creditor cannot change without the debtor’s consent, and upon conflicting evidence presents a case for the jury upon the issue.
    5. Debtor and Creditor — Mortgage—Tender—Payment—Application.
    To make a good tender of payment of an amount secured by a mortgage, it is necessary for the debtor to allege and show, in addition to the offer, that he has at all times since the tender been ready, able, and willing to pay, and accompany the plea by payment of the money into court. Dickerson v. Simmons, 141 N. C., 330, where the tender was made upon the maturity of the debt; and Smith v. B. and L. Assn., 119 N. C., 261, in relation to tender by a surety, cited and distinguished.
    Appeal by defendant from Ferguson, J., at Fall Term, 1910, of HERTFORD.
    
      The facts are sufficiently stated in the opinion of the Court by Mr. Justice Allen.
    
    No counsel for plaintiff.
    
    
      R. G. Bridger for defendant.
    
   Allen, J.

This is an action to recover possession of personal property, which the plaintiff claims by reason of a chattel mortgage executed to him by the defendant. The defendant, among other things, alleges in his answer: “That there is still due and owing on the mortgage described in the affidavit for the claim and delivery of personal property in this action, the sum of $6.59, and that said amount was duly tendered to plaintiff by the defendant’s attorney on 8 December, 1909, with interest on said mortgage. Said tender is hereby pleaded in bar of further recovery in this action.”

It was admitted on the trial that during the month of April, 1909, the defendant executed to the plaintiff a chattel mortgage to secure $100, and conveyed therein a brown mare and the crops raised by the defendant during said year. It was also admitted that during the summer of 1909 the defendant became indebted to plaintiff on account, which was unsecured, in the sum of $29.98, and that there was no agreement, at the time this debt was contracted, that it should be paid out <3f the proceeds of the property in the mortgage, and the mortgage debt and the open account were not kept upon the books as a running account. The plaintiff admitted, upon his examination as a witness, that about the first of December, 1909, the defendant delivered to him peanuts, a part of the crop of 1909, raised by the defendant, and that he realized therefrom $93.41, which he applied first to the unsecured debt. The defendant introduced evidence that after the mortgage debt became due, he tendered payment of the remainder of said debt, after applying thereto the proceeds derived from the peanuts, and that the plaintiff refused to accept the same. He did not allege nor offer to prove that he had at all times been ready, willing, and able to pay, nor did he pay into court the amount he admitted to be due.

Tbe plaintiff testified tbat tbe defendant agreed that the amount received from tbe sale of tbe peanuts should be applied first to tbe unsecured debt. Tbe defendant denied this.

Two exceptions are presented by tbe record. Tbe first is to tbe charge of tbe judge as to tbe application of tbe payment of $93.41, wbicli is as follows: “Tbat if plaintiff received tbe mortgaged property from defendant and sold tbe same, or retained the said property for bis own use, tbe defendant bad a right to direct its application, and if so directed by defendant, plaintiff would have to credit same to tbe secured debt; but if defendant failed to direct its application, then plaintiff could apply it to either claim as be might see fit; if neither tbe plaintiff nor defendant applied tbe payment, then tbe law would apply it to tbe most precarious debt — in tbe case at bar, the unsecured debt”; and tbe second is to tbe refusal to give the instruction asked by tbe defendant, as to tbe effect of a tender, which is as follows: “Tbat if tbe jury shall find from tbe evidence that tbe defendant was entitled to be credited on the mortgage debt with tbe peanuts received by plaintiff, and if tbe jury shall further find from tbe evidence tbat tbe defendant through his attorney tendered balance due on tbe mortgage debt before tbe bringing of this suit., tbat said tender would be a discharge and release of tbe mortgaged property, and tbe jury should answer tbe first issue, $6.59, with interest.”

Tbe charge given by bis Honor is erroneous. Tbe question is fully discussed and tbe authorities collated in Cyc., vol. 30, p. 1228 ei seq.

The general rule as to the application of payments is that tbe debtor lias tbe right, in tbe first instance, to direct tbe application of a payment made to a creditor who bolds a secured and an unsecured debt, and tbat this right must be exercised at the time the payment is made. Miller v. Womble, 122 N. C., 139. If the debtor does not exercise this right, the creditor may apply tbe payment to either debt (Moss v. Adams, 39 N. C., 43; Sprinkle v. Martin, 72 N. C., 92; Young v. Alford, 118 N. C., 220) ; or be may apply a part to one debt and the remainder to the other (Young v. Alford, supra) ; and be is not restricted to the time tbe payment is made. If, however, he makes the application, be cannot change it without the consent of the debtor. Cyc., vol. 30, 1239, and note, where many authorities are collected. If neither the debtor nor the creditor makes the application, the law applies it to the unsecured debt. Miller v. Womble, supra.

It was this rule which the judge presiding undertook to enforce, but it has no application to the facts in this record. The payment in this case was a part of the proceeds of the property conveyed in the chattel mortgage, and the creditor knew this. The execution of the mortgage was an application of the property to the payment of the debt secured therein, and this could not be changed without the consent of the debtor. Bonner v. Styron, 113 N. C., 32. The plaintiff alleged that the defendant gave this consent,- and the defendant denied it. This presented a question for the jury, which was withdrawn by the charge of his Honor.

It would not be necessary to consider the request to instruct the jury as to the effect of a tender, if it was not reasonably certain that the same question will be presented on another trial. We think the judge properly refused to give the instruction. The plea of tender is defective in that, in addition to alleging that he tendered the amount due, the defendant fails to allege that he has at all times since the tender been ready, able, and willing to pay, and in failing to accompany the plea by payment of the money into court; and the evidence in support of the plea is equally defective.

In Dixon v. Clark, 57 E. C. L. R., 376, Wilde, C. J., announces the rule as follows: “The principle of the plea of tender, in our apprehension, is that the defendant has been always ready (toujours prist) to perform entirely the contract on which the action is founded; and that he did perform it, as far as he was able, by tendering the .requisite money; the plaintiff himself precluding a complete performance by refusing to- receive it. And as, in ordinary cases, the debt is not discharged by such tender and refusal, the plea must not only go on to allege that the defendant is still ready (uncore prist), but must be accompanied by a proferí in curiam of the money tendered”; and this is cited with approval in Bank v. Davidson, 70 N. C., 122.

In Bilzell v. Haywood, 96 U. S. R., 580, it is said tbat, “To have tbe effect of stopping interest or costs, a tender must be kept good,” and in Soper v. Jones, 56 Md., 503: “A plea of tender, not accompanied by profert in curiam, is bad.”

In the case of Parker v. Beasley, 116 N. C., 1, it is beld tbat an unaccepted tender of tbe amount due on a debt secured by a mortgage does not discharge tbe lien of tbe mortgage, unless tbe tender be kept good and tbe money be paid into court, and the same doctrine is affirmed in Dickerson v. Simmons, 141 N. C., 330.

This last case notes tbe distinction between a tender made on tbe day tbe debt becomes due, called tbe law day, and one made afterwards, and bolds tbat tbe first discharges tbe mortgage, although tbe plea of tender is not accompanied by payment into court.

The principle is different when the rights of a surety, or of one standing in the relation of a surety, are involved. In such case, a valid tender unaccepted releases the surety and bis property conveyed to secure the debt of the principal, and it is not necessary to pay the money into court to make the plea good. Smith v. B. and L. Assn., 119 N. C., 261.

For tbe reasons given, there must be a venire de novo.

New trial.  