Grand Lodge, Benevolent Knights v. Murphy Const. Co. - 152 La. 123, 92 So. 757 (1922)

Rule:

A creditor of several claims against the same debtor, all matured, receiving payment from his debtor, must, in the absence of the consent of the debtor, impute the payment so made to the debt secured by privilege, or by a surety, in preference to one not so secured; both the debtor and his surety may enforce this imputation.

Facts:

The instant concursus proceeding grew out of a building contract. The owner (plaintiff) has called in the contractor, the surety on the latter's bond, and certain furnishers of material. The controversy in this court is entirely between these last and the surety, and only four claims are involved. The matter was tried before a commissioner, whom we recognize as being then a practicing member of the bar, now deceased. He allowed: (1) Kenny, for hauling, $ 69.50; (2) Geier Bros., for lumber, $ 822.98; (3) Holzer, for metal work, $ 572.50; (4) Maurer, for painting, $ 1,120.25. The trial judge disallowed the Kenny claim, but otherwise approved the finding of the commissioner. The surety appealed; Kenny answered, praying that his claim be reinstated; Geier Bros. answered, praying for an increase.

Issue:

Were the payments received by surety received from the contractor during the course of their work properly imputed to other claims which they had against the latter? 

Answer:

Yes.

Conclusion:

First of all, the contractor paid with his own check, drawn against his own bank account. Presumable he had something of his own, and was to make some profit even out of this very contract, which would all be his own, and with which he had not only the legal but even the moral right to do as he pleased. If there was either right or obligation on the part of any one to look into the state of the contractor's private affairs, it behooved his surety, as an interested party, to do so, rather than a creditor seeking simply to collect a past-due debt. Again, Holzer's contract was for a lump sum, and the time for payment was not specified. The law therefore fixed the time for payment as being at the time of delivery, i. e., completion. And the work on this contract was not completed until long after the payment in controversy was made; so that at the time these payments were made and imputed to an old and overdue account, the two debts were not equally due, and hence the imputation was properly imputed "to the debt which had fallen due, though less burdensome than that which was not yet payable." As to Maurer's claim, that was to be paid for as the work progressed; but the testimony shows that he had done very little work on the building when the payments were made to him, not enough to entitle him to demand a payment. Moreover, the evidence shows that Maurer was pressing the contractor for the past-due claim, and clearly the claim which the contractor meant to pay was that which his creditor was demanding and could have insisted on; not the claim which was not yet due, which the creditor was not demanding and could not have insisted upon. Manifestly then the contractor meant that the payment should be imputed to the claim which the creditor was demanding. Finally, the contract between the owner and contractor provided that the latter should be paid monthly, upon certificates of the architect for 85 per cent. of "the value of materials in place and work executed on building up to the end of each month," and the architect issued certificates accordingly. But the evidence shows that at the time of the payments in controversy, Holzer's work was not in place, but at his own shop, and that Maurer had done very little work, if any, on the building. So that the architect's certificates did not at that time include the work and materials of these two subcontractors; and thus, whatever may have been the shortcomings of the contractor in other respects, it cannot be said that he was diverting to the payment of the old accounts due these claimants money paid to him by the owner on account of work done by them on this building.