which were applied to the account of the other corporation. Surety, Cent. Dig. §§ 235-239; Dec. Dig. § [Ed. Note. For other cases, see Principal and 113.*] 1. INTOXICATING LIQUORS (§ 327*)-SALES-7. PAYMENT (8 78*)—APPLICATION-FINDINGS CONSTRUCTION-PLACE OF CONTRACT. Where intoxicating liquors were sent to a resident of the state by a dealer outside of the state, on receipt of orders sent from within the state in accordance with a previous arrangement made outside of the state, the place of the contract was outside of the state, although by its terms a mortgage on property in the state was taken to secure the indebtedness for the goods so purchased. [Ed. Note.-For other cases, see Intoxicating Liquors, Cent. Dig. §§ 467-472; Dec. Dig. § 327.*] 2. SALES (§ 56*)-CONSTRUCTION-PLACE OF CONTRACT. OF FACT. The failure of the buyer to object to the application of such payment to the other accounts was not a ratification of such application, since he had already legally directed the proper apWhere a mortgage was given partly to se-plication, and could not be compelled to repeat cure a loan, and partly to secure the performance of a contract for the purchase of goods, executed without the state, the fact that the loan was made within the state does not affect the place of making the contract for the purchase of the goods. [Ed. Note. For other cases, see Sales, Cent. Dig. § 154; Dec. Dig. § 56.*] 3. HUSBAND AND WIFE (§ 9*)-RIGHTS OF HUSBAND-REAL PROPERTY OF WIFE. A husband has a freehold estate in the real property of his wife which is not held to her sole and separate use. [Ed. Note. For other cases, see Husband and Wife, Cent. Dig. §§ 23, 30-37; Dec. Dig. § 9.*] 4. BANKRUPTCY (§ 364*)-CLAIMS-SECURITY AGAINST PROPERTY OF THIRD PERSON. Where a creditor, whose claim against a bankrupt was secured by a chattel mortgage and by a mortgage upon the property of the wife of the bankrupt, made full disclosure as to his security in the bankruptcy proceedings, and the bankrupt in effect denied any interest in the mortgaged property, the proving of the claim against the bankrupt and the receipt of a dividend thereon did not constitute a waiver of the mortgage; since security on property not belonging to the bankrupt does not make the creditor a secured creditor within the meaning of the bankruptcy laws. [Ed. Note. For other cases, see Bankruptcy, Cent. Dig. §§ 485, 504; Dec. Dig. § 364.*] 5. PRINCIPAL AND SURETY (§ 113*) -LIABILITY OF SURETY-RATIFICATION OF PRINCIPAL CONTRACT. Where a seller of goods had an agreement with the buyer that the discounts to which the buyer was entitled should be applied upon a loan made by the seller, which was secured by note and mortgage executed by a surety, the surety is entitled to have the discounts so applied, notwithstanding a subsequent agreement between the buyer and seller, of which the surety had no knowledge, that they should be applied to other items. [Ed. Note. For other cases, see Principal and Surety, Cent. Dig. §§ 235-239; Dec. Dig. 113.*] 6. PRINCIPAL AND SURETY (§ 113*)-PAYMENT BY PRINCIPAL-RATIFICATION OF PAYMENT. Where the same individuals composed separate corporations, each of which sold liquors to the buyer-the account of one being secured by a mortgage on the property of the buyer's wife, the making of checks by the buyer, payable to the secured corporation, was a direction by him to apply the payment to the account of that corporation, and the surety is entitled to credit on the mortgage for the amount of such payments his directions. [Ed. Note.-For other cases, see Payment, Cent. Dig. §§ 99-103, 128; Dec. Dig. § 38.*] 9. PRINCIPAL AND SURETY (§ 113*)—PAYMENT BY PRINCIPAL-APPLICATION. When the payments were received by the secured corporation, they were in law applied at secured debt, and no ratification by the principal once to the extinguishment pro tanto of the of the application to any other purpose would affect the surety's rights. [Ed. Note.-For other cases, see Principal and Surety, Cent. Dig. 88 235-239; Dec. Dig. § 113.*] Appeal in Chancery, Rutland County; Frank L. Fish, Chancellor. Suit by P. Ballantine & Sons against Etta M. Fenn and another to foreclose a mortgage. Decree for the orator, and defendants appeal. Decree affirmed, and cause remanded, with directions to alter the decree. Argued before POWERS, C. J., and MUNSON, WATSON, HASELTON, and TAYLOR, JJ. Charles L. Howe and Walter S. Fenton, both of Rutland, for appellants. Lawrence, Lawrence & Stafford and T. W. Moloney, all of Rutland, for appellee. WATSON, J. [1] The record shows that the orders for intoxicating liquors were sent by the purchaser, Frederick Fenn, by mail or by telegraph from Rutland, this state, to New York City, and that the goods so ordered were shipped to him on such orders, he paying the freight, all in accordance with a previous arrangement entered into between him and the petitioner in the city of New York. Clearly the place of the contract was in New York. Tuttle & Reed v. Holland, 43 Vt. 542; Backman v. Mussey, 31 Vt. 547; Bacon v. Hunt & Co., 72 Vt. 98, 47 Atl. 394. This case is distinguishable from that of Beverwick Brewing Co. v. Oliver, 69 Vt. 323, 37 Atl. 1110. There the goods were ordered by the purchaser at Burlington, this state, of the seller in Albany, N. Y., by letter or telegraph, pursuant to a previous arrangement made in this state, and it was held that the contract was partly made here, and therefore that it was unenforceable. Nor does the fact that security, by way of a mortgage or mortgages, was taken in this state, in terms broad enough to cover payments of indebtedness for goods purchased and any other indebtedness of the purchaser to the petitioner, operate to make the contract of sale of liquors, ordered and shipped as aforesaid, a contract wholly or in part made in Vermont. De Wolf v. Johnson, 10 Wheat. 367, 6 L. Ed. 343. its order discharging Frederick from all debts and claims provable against his estate, including the claim of the petitioner on which the latter received the sum of $444.95, the same being paid on August 1, 1910. In the schedules filed by Frederick in his bankruptcy proceedings to the question as to debts owing, secured and unsecured, he answered that the petitioner was a creditor holding securities, and described the securities as a "real estate mortgage on property of Etta M. Fenn," also naming the chattel mortgage. In answer to the question as to "Location and description of all real estate owned by the debtor or held by him," he named an undivided interest in mineral [2] Whether any part of the contract for the loan was in law made in this state we need not inquire; for the entire consideration of the note was money loaned, and the part of the transaction pertaining thereto is severable from that particularly relating right situate in Bridgewater, this state, but to indebtedness for goods sold. Consequent-named no other real estate owned by him ly, though it be considered that the delivery or in which he had an interest; and under of the check and the execution and delivery another schedule, in answer to the inquiry, of the note and mortgage in Rutland fix the Interest in land," place of the part of the contract particularly he answered, "None." Thus it is seen that "What general interest? relating to the loan as in this state, it does in those proceedings the petitioner before us, not affect the place of the part of the con- in proving his claim, made full disclosure as tract pertaining to the sale of goods. Shaw to his security and as to the record title of the real estate covered by its mortgage, including the place of record; while the bank v. Carpenter, 54 Vt. 155, 41 Am. Rep. 837; Osgood v. Central Vermont Ry. Co., 77 Vt. 334, 60 Atl. 137, 70 L. R. A. 930. [3] At the time this mortgage was given, the real estate covered by it was the prop erty of Etta M. Fenn, the wife of Frederick Fenn, but it was not held to her sole and separate use, and Frederick held a freehold estate therein. Laird, Assignee, v. Perry, 74 Vt. 454, 52 Atl. 1040, 59 L. R. A. 340. rupt gave the real estate covered by this mortgage as the "property of Etta M. Fenn,” and in effect denied having any interest himself therein. The petitioner's standing in the court of bankruptcy was, then, through no fault of its own, that of a cred of the claim) and a mortgage on real estate itor having securities for the payment of [4] Before the commencement of this suit, its claim as follows: A chattel mortgage on Frederick was adjudged a bankrupt by the property owned by the bankrupt (which United States District Court for the District property was disposed of and the sum reof Vermont, and in the course of the proceed-ceived therefor applied in fixing the amount ings the petitioner made proof of its claim, therein setting forth the fact that the claim was secured by a chattel mortgage on property owned by the bankrupt, and also by the mortgage here sought to be foreclosed, stating the date of the latter, the book and page of the records of the city of Rutland where recorded, the street on which the property mortgaged is situated in said city, together with the name of the block as known and called; that the property at the time of execution of the mortgage (on information and belief) "stood in the name of said Etta M. Fenn, and still stands in her name"; that the mortgage was made by said Etta M. and Frederick in favor of the petitioner, and was intended as collateral security for the payment of the said note for $4,000 and to secure all moneys then due or thereafter to become due to the petitioner from said Frederick on open account or otherwise. amount of the petitioner's claim was litigated in the bankruptcy proceedings, judgment being finally rendered therein against the bankrupt for the sum of $6,356.92 after deducting the sum realized from the sale of his property covered by the chattel mortgage before mentioned. On the 17th day of The [5] By the terms of the contract and arrangement, Frederick was entitled to a discount of a certain per cent. on the goods furnished him by Ballantine & Co., and cer checks were received back from the bank on which they were drawn. Frederick made no objection to the various applications made until after the commencement of this suit. Of the payments so made, checks were payable to Ballantine & Co. to the aggregate amount of $7,207.20. There were applied on the account of that company payments ag ed by Etta M. that so much of the lastnamed sum as is in excess of the checks payable to that company, namely, $1,656.30, should have been applied on the petitioner's accounts, and that she is entitled to have it applied now in reduction of the sum due thereon in equity. Regarding the applications of payments, the rule is stated in Roakes v. Bailey & Newcomb, 55 Vt. 542, as follows: "A debtor paying money to his creditor has the primary and paramount right to direct the application of his money to such items or demands as he chooses. This direction may be given in express terms, or it may appear by implication from the circumstances of the transaction. If the debtor pays with one intent and the creditor receives with another, the intent of the debtor shall govern. If no application is directed by the debtor, the creditor may make it." And in Pierce, Clark & Co. v. Knight, 31 Vt. 701, it is said: "All authorities agree that the party making the payment has the right in the first instance to direct its application to either of several debts, or to any particular part of a debt, where such application is capable of being made, and that the party receiving the payment is bound to apply it as directed." him by the petitioner, and it was the under- | showing how they were applied. These standing and agreement between the parties that Fenn should pay the bills for goods in full and leave the discounts to be applied in reduction of the "loan account." After a part of the discounts had been so applied, the agreement was modified and changed, without the knowledge or consent of Etta M., so that some of the discounts were credited by the petitioner on the "bottled ale ac-gregating the sum of $8,863.50. It is claimcount" and on the "draught ale account," and by Ballantine & Co., to the amount of $615.88, on their beer account. As to the applications made on the "bottled ale account" and on the "draught ale account," Etta M. made no complaint, because the amounts due the petitioner thereon, if any, were secured by the mortgage on her property; but she did object to the application of the sum named on Ballantine & Co.'s beer account, claiming that by the terms of the original contract the same should have been applied on the petitioner's "loan account." It is found that in making and giving the note and mortgage to the petitioner, Etta M. was merely a surety for her husband; and from the nature of the transaction and the terms of the arrangement made, this must have been known to the petitioner. Her undertaking as surety was to the petitioner, not to Ballantine & Co., and the "beer account" of the latter was not within it. We think the surety is entitled in equity to have the said sum of $615.88 of the discounts (which was applied on Ballantine & Co.'s beer account) applied on the petitioner's "loan account," according to the original agreement, In the matters under consideration, the with interest on said sum from October 31, debtor unmistakably showed his intentions 1907. Ferrisburg v. Birkett, 60 Vt. 330, 14 as to the application in the manner of makAtl. 88; Hansen v. Rounsavell, 74 Ill. 238. ing his checks payable, as well as by the [6] During all the years this business was creditor to whom he sent them. The petigoing on, Frederick sent remittances, most- tioner, a corporation, was doing business ly by checks, from month to month to the with Frederick Fenn, as such. Ballantine & petitioner and to Ballantine & Co. Some Co. "was another concern operated by the times the checks were payable to P. Ballan- same individuals," but whether it was a tine & Sons, sometimes to Ballantine & Co., corporation or a partnership does not apand sometimes to both concerns together. pear. Let it be either, it was a different All these checks were received by the peti- creditor from the petitioner and, as before tioner and were applied by it to the credit observed, not a party to, nor protected by, of Frederick on its various accounts against the contract of suretyship. In the way the him, and on the beer account of Ballantine & business between the debtor and the two conCo., "in accordance with the original under- cerns was done, the acts of the debtor in standing and agreement of said parties, and making a check payable to one of the conthe state of said accounts," so that some- cerns and sending it to the concern named as times a check payable to the order of Bal-payee were tantamount to directing the aplantine & Co. was applied on one of the peti-plication to be made on the account of that tioner's accounts, and sometimes a check creditor; and when a check was drawn by payable to the order of the petitioner was applied on the beer account of Ballantine & Co., and sometimes checks payable to one or the other of said concerns were "split" and part applied on one account and part on an- [7] We need not consider what the effect other; and statements showing these va- would be if it were found that the applicarious applications were sent to Frederick | tions made by the petitioner were in fact as monthly. Annual statements were also sent originally agreed by the parties, for this fact to him, and notations were made by the pe- is not found. The finding that the applica the debtor, payable to both concerns and sent to either, he in effect directed that in the application the sum be divided between them. ance with the original understanding and agreement of said parties and the state of said accounts" includes an element not within the understanding and agreement, namely, "the state of said accounts." If the petitioner would justify the applications made, on the ground of an original understanding and agreement of the parties, it must show them made in accordance therewith, independent of any additional, and perhaps controlling, element of consideration. [8] It is found in effect, however, that by way of the monthly and annual statements from the petitioner to the debtor, and by the notations on the checks returned to him, after payment, by the bank on which they were drawn, the debtor subsequently had notice of the various applications made by the petitioner, and that he made no objection thereto until after the commencement of this suit. Yet such silence on his part is not sufficient to show a ratification by him of the applications made on the account of Ballantine & Co., another creditor, to say nothing of the rights of the surety. In Eylar v. Read, 60 Tex. 387, it was held that if the debtor, at the time of paying money to his creditor, directed it to be appropriated to the payment of a certain debt, secured by lien on the debtor's homestead, the fact that he was afterwards given a receipt by the creditor, declaring the money was received on "general account," did not make it incumbent upon the debtor to take steps to have the receipt changed, or in default of such action be precluded from insisting that the money be appropriated as directed; that his silence after he had once spoken and directed, as the law authorized him to do, that the money be appropriated in a certain way could not confer upon the creditor any right to divert it; that nothing less than the consent of the debtor can confer such right after he has once directed to what the application be made. To the same effect is Massengale v. Pounds, 108 Ga. 762, 33 S. E. 72. The holding in the case of Sawyer v. Howard, 86 Vt. 63, 83 Atl. 535, is not to the contrary. There the debtor was given, not only immediate notice of the application, to which he made no protest or complaint, but he received as paid the note on which the money was in part applied, with the note collateral thereto, and with full knowledge retained these notes a year without complaint, and did not even of fer to return them at the trial. [9] Moreover, the entire indebtedness of Frederick to the petitioner was represented by the $4,000 note, the "bottled ale account," and the "draught ale account," all secured by the mortgage in question; and, when he made payments to the petitioner by checks payable to it and sent to it, as stated above, the payments so made were applied by law at once in extinguishment of that indebtedness pro tanto, without regard to formal in dorsement on the note, or entry of credit on account. Lyon v. Witters, 65 Vt. 396, 26 Atl. 588; Farrington v. Jennison, 67 Vt. 569, 32 Atl. 641; Rowell v. Lewis, 72 Vt. 163, 47 Atl. 783. And no application of those payments by the petitioner on the account of Ballantine & Co., though subsequently ratified by Frederick, could be effective against the surety without her consent. Hurd v. Spencer, 40 Vt. 581; Ellis v. Allen, 48 Vt. 545. follows that the said sum of $1,656.30, with interest thereon from October 17, 1907 (the time found by the master), should be applied in reduction of the sum due in equity upon the mortgage in suit. It Decree affirmed, and cause remanded, with directions that the decree be altered so as to conform to the views expressed in this opinion, with costs to the defendants in this court. Let a new time of redemption be fixed. (88 Vt. 140) TOWN OF GRAND ISLE v. MCGOWAN et al. (Supreme Court of Vermont. Grand Isle. Oct. 14, 1914.) 1. SALES (8 456*)-CONDITIONAL SALE-FORM -LEASE. in the form of a lease by which the buyer was Where a piano was purchased on a contract to receive a bill of sale of the piano on payment of the sum fixed as rent with interest, the instrument was a conditional sale. [Ed. Note.-For other cases, see Sales, Cent. Dig. 88 1327-1331; Dec. Dig. § 456.*] 2. BAILMENT (§ 22*)-RIGHT TO POSSESSION TERMINATION. Where a local grange came into possession of a school piano under an arrangement with its caretaker that it might be used by the grange until wanted by the school, the right of the grange to retain it longer was terminated on demand made for its return after reopening the school. [Ed. Note. For other cases, see Bailment, Cent. Dig. §§ 103-106; Dec. Dig. § 22.*] 3. SUBROGATION (§ 26*)-CONDITIONAL SALE -TRANSFER OF INTEREST-SUBROGATION TO RIGHTS OF Seller. A school teacher, having purchased a piano for the school under a conditional contract of teacher sale, terminated her employment as without completing the payments, after which P., with the teacher's consent, paid the balance due on the contract in order to save it for the benefit of the school, which was to be reopened. ment of the seller's claim on the piano. Held, There was no agreement, however, for an assignthat the transaction did not amount to a transfer of the seller's rights in the piano to P., nor time of payment he was under no obligation to was he subrogated to such rights; since at the pay, and had no interest to protect thereby. [Ed. Note.-For other cases, see Subrogation, Cent. Dig. § 67; Dec. Dig. § 26.*] 4. SALES (8 475*) CONDITIONAL SALES TRANSFER OF INTEREST-EFFECT. A school teacher, having purchased a piano under a conditional sale contract for the benefit of the school, left the school before the piano was paid for, and turned over all papers in the transaction to the clerk of the school board. The town paid nothing, and, the sellers becoming insistent, the clerk turned over the matter to G., who offered to raise money to save the piano for the school. Payments were made be provided. A plan was finally adopted thereon until it was necessary to pay the bal- whereby funds were to be raised by the ance, when P. saw the former school teacher and asked her if she was willing he should make school children by way of entertainments and the payments and save the piano for the school; subscriptions were to be solicited to pay and, receiving an affirmative reply, P. paid the for the piano. Dealers not being found who balance of the price. Held, that such facts did would sell the piano to the children of the not indicate an assignment of the school teacher's rights in the piano, nor did they raise an school, it was decided that Miss Woodworth estoppel; since there was no showing that P. should purchase the piano for the use of the advanced his money or relied on any understand- school and give her personal note therefor ing that he should be reimbursed and should be with a lien upon the piano. The purchase entitled to hold the piano as security. was accordingly made of Cluett & Sons, dealers in pianos, residing in New York. after the purchase about $100 was paid upon the piano note from the proceeds of entertainments given by the pupils of the school. [Ed. Note.-For other cases, see Sales, Cent. Dig. §§ 1403-1406; Dec. Dig. § 475.*] 5. REPLEVIN (§ 11*)—RIGHT OF ACTION-AC CRUAL-LIMITATIONS. Where a school teacher purchased a piano under a conditional sale for the benefit of the school, and during the time the school was closed the piano was used by a local grange, a cause of action on behalf of the town to recover the piano for the benefit of the school did not accrue until demand for the return thereof had been made. [Ed. Note. For other cases, see Replevin, Cent. Dig. §§ 85-97; Dec. Dig. § 11.*] 6. REPLEVIN (§ 8*) -ASSIGNMENT BY VENDEE UNDER CONDITIONAL SALE-EFFECT-RIGHT TO SUE. Where a school teacher purchased a piano for the school under a conditional sale contract, and after the purchase price had been paid and it was desired by the town to reopen the school, she assigned all her interests in the piano to the town, the fact that she had previously consented to a payment of the balance of the price by an other did not constitute an abandonment of her trust, but her transfer to the town vested in it the legal title to the piano and entitled the town to sue in replevin for its recovery. [Ed. Note.-For other cases, see Replevin, Cent. Dig. §§ 45-68; Dec. Dig. § 8.*] Exceptions from Grand Isle County Court; Frank L. Fish, Judge. Replevin by the Town of Grand Isle against H. Q. McGowan and others. Judgment for plaintiff, and defendants bring exceptions. Affirmed. Argued before POWERS, C. J., and MUNSON, WATSON, HASELTON, and TAYLOR, JJ. Sherman R. Moulton and Edmund C. Mower, both of Burlington, for plaintiff. V. A. Bullard, of Burlington, for defendants. TAYLOR, J. This is an action of replevin for a piano, tried by court at the August term, 1913. Judgment was rendered on the findings of fact against McGowan and Gordon, who reserved exceptions. Shortly At its annual meeting in 1904 the town voted to discontinue the school, and from that time until 1912 did not contribute to its support. The school was continued for several years as a private school managed by a She committee of citizens and supported by the Parks turned over to Griswold all papers re lating to the piano. Mr. Adams advanced a part of the balance due on the piano. The piano continued to be used by the school, which was then being conducted as a private school, until it was discontinued. Griswold rented the piano two summers and applied the rental on the purchase price. In January, 1908, the Grand Isle County Grange, which then occupied the school building as a meeting place, through a committee, arranged with Mr. Griswold for the use of the piano In 1903 a school was being conducted in until needed by the school on payment of the the town of Grand Isle in a building used balance of the amount advanced by Mr. by the town both as a townhouse and for Adams. In December, 1912, the grange reschool purposes. The school was called a moved to a new hall and took the piano with high school, and was supported by funds them. While Mr. Griswold was managing contributed in part by said town and in part the piano he used funds received from school by tuitions and subscriptions. The school entertainments and from recitals to reduce was managed by the school directors of said town, and one Miss Jessie Woodworth was employed as teacher. Desiring a piano for When the balance due Cluett & Sons on use in the school, Miss Woodworth conferred the note had been reduced to about $100, one with the pupils of the school and different E. J. Parker, also a resident of Grand Isle people of the town as to how a piano could and a member of the private school commit the note given by Miss Woodworth. This |