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"Not

Debt, 230.

Extinguish

(b) As an Admission, 232.
(c) Creditor Not Bound to
Accept, 233.

(d) Does Not Make an Ac-
count Mutual, 233.

2. Effect on Statute of Limita tions (See LIMITATION OF ACTIONS), 233.

3. Computing Interest on Partial Payments, 233. XIV. Application of Payments, 234. 1. By Debtor, 234.

(a) Right to Direct, 234.
(b) Creditor Must in First
Instance Accept Debtor's
Appropriation, 235.

(c) When Debtor Must Make
Application, 236.

(d) How Shown, 236.
2. By Creditor, 237.

(a) On Failure of Debtor to
Direct Application, 237,
(b) Must be Made to Debt
Due, 238.

(c) May Make Application
Most Favorable to Him-
self, 239.

(d) To Unsecured Debt, 239.

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I. DEFINITION.-Payment is the discharge in money of a sum due.1

1. Bouvier's Law Dict.

This is the definition of "payment" in its most restricted sense. In its most general acceptation, it is the fulfillment of a promise, the performance of an agreement, the accomplishment of every obligation, whether it consists in giving or in doing. It is a not technical term, and has been imported into law proceedings from the exchange, and not from law treatises. To prove payment, the party pleading it must show the payment of money or something accepted in its stead. Bouv. Law Dict., 2 Greenl. Evid. (13th ed.), § 516; 5 Masse, Droit Commerciel 229.

Abbott says (Law Dict.): "To pay, as usually understood, means to deliver money. This is, however, not necessarily involved. The word does, however, imply a delivery of value, and that it is the value called for by the engagement to be discharged. For when

that engagement calls for something else than a simple delivery of value, performance is the proper term; and when something else than what is called for is delivered and accepted, this is a compromise or a discharge, and pay does not apply."

Payment is a transfer of money from one person, the payor, to another, the payee. Rap. & Lawr. Law Dict.

The act of discharging a debt, duty, or obligation by delivering the value for which it calls; also the money or other value delivered. Abbott's Law Dict.

Delivery by a debtor to his creditor of the amount due-as a plea, money, or its equivalent in value. Anderson's Law Dict.

""Payment' is not a technical word: it has been imported into law proceedings from the exchange and not from law treatises. It does not necessarily

II. WHAT CONSTITUTES PAYMENT-1. In General.-Payment is a mode of extinguishing obligations. It is an act calling for the exercise of will, of consent. To constitute a payment, money or some other valuable thing must be delivered by the debtor to the creditor for the purpose of extinguishing the debt, and the credit. or must receive it for the same purpose.

mean payment in satisfaction and discharge, but may be used in a popular sense." Dwarris on Statutes, (2nd ed.) 675, citing Maillard v. Argyle, 6 M. & G. 40.

"Payment" properly means the full satisfaction of a debt by money, not by an exchange or compromise, or an accord and satisfaction. Manice v. Hudson River R. Co., 3 Duer (N. Y.) 426, 441.

To pay is to discharge a debt, to deliver a creditor the value of a debt, either in money or in goods, to his acceptance, by which the debt is discharged. Beals v. Home Ins. Co., 36 N. Y. 522, 527; Tolman v. Manufacturers Ins. Co., 1 Cush. (Mass.) 73.

The word "pay" implies an indebtedness. Lent v. Hodgman, 15 Barb. (N. Y.) 274, 278.

Payment is not merely the delivery of a sum of money, but the performance of an obligation; it is an act calling for the exercise of the will of consent, without which it has not the characteristics of that mode of extinguishing obligations. Germon v. McCan, 23 La. Ann. 84.

"To pay is to discharge an obligation by a performance according to its terms or requirements. If the obligation be for money the payment is made in money; if for merchandise or labor, a delivery of the merchandise or a performance of the labor is payment; or if for the erection of a building, performance according to the terms of the contract is payment." Tolman v. Manufacturers Ins. Co., 1 Cush. (Mass.) 73, 76. See also, Beals v. Home Ins. Co., 36 N. Y. 527

"Payment, in its largest sense, is the actual accomplishment of the thing that the party obliges himself to give or to do, whatever they may be; although, in our acceptation, it is ordinarily confined to money engagements, and it is therefore the natural manner in which obligations are extinguished. When the obligation is to give something, the payment is accomplished when the property in the thing is to be given is actually transferred to the

creditor, and, of course, in order to con. stitute the transaction a payment, there must be both a delivery by the debtor and an acceptance by the creditor, with the purpose, on the part of the former, to part from, and of the latter to accept of the immediate ownership of the thing passed from the one to the other. In a payment we ordinarily look to the act of the party making it; but yet its legal import is an act in which the debtor tenders and the creditor accepts that which is offered. Ut itaque solutio fieri posset, necessario requisitur set untrinsque tam præstant is quam accipientis voluntas concurrat, is the definition given in the Roman law, and may be safely adopted as a correct definition of a common law payment." Thompson v. Kellogg, 23 Mo. 285.

In the above case the creditor's agent presented a draft to the debtor and demanded payment. Therefore the debtor uncovered a large quantity of dimes and half dimes lying on the table, and told the agent there was the money for him. The agent went up to the table, put his hand on the money and in running his hand over it mixed the coin together somewhat, and said: "I suppose I shall have to take if, and I will go to my office to get bags for it." While he was gone the sheriff levied on the coin as the property of the debtor. In an action to determine the question whether the draft had been paid the court instructed the jury that if the agent received the coin "in immediate satisfaction of the draft" it constituted a payment. And the jury having formed that it was not so received, the supreme court refused to disturb the verdict.

1. Bloodworth v. Jacobs, 2 La. Ann. 24; Kingston Bank v. Gay, 19 Barb. (N. Y.) 459; Cushing v. Wyman, 44 Me. 121; Caine v. Coulson, 1 H. & C. 746; s. c., 32 L. J. Exch. 97.

Payment means satisfaction by money not by an exchange or compromise, or an accord and satisfaction. Manice v. Hudson River R. Co., 3 Duer (N. Y.) 426, 441.

"Payment, in a legal sense, is the

discharge of a contract or obligation in money or its equivalent, and it is usually made with the assent of both parties to the contract. The word is not used in statutes or by text-writers in the bad sense of revenge or punishment. No creditor is permitted by the laws to seize his debtor's property and to declare at his own pleasure that he will take it in satisfaction of his demand. If he so takes it he is a trespasser, and liable in damages." Brady v. Wasson, 6 Heisk. (Tenn.) 131.

"As to the mode of payment it may be by any lawful method agreed upon between the parties and fully executed. The meaning and intention of the parties when it can be distinctly known is to have effect, unless that intention contravenes some well established prin. ciple of law." Dodge v. Swazey, 35 Me. 535

Says PEARSON, J.: "Payment must be made either in money or in money's worth; but to amount to a payment, the thing must be done, the money must be paid, or the thing taken as money must be passed so as presently to become the property of the other party. A promise or undertaking to pay, either in money or other thing, is not payment. The contract is executory; whereas payment is executed, a thing done." Rhodes v. Chesson, Busb. L. (N. Car.) 336.

Says MR. DANIEL: "By payment is meant the discharge of a contract to pay money by giving to the party entitled to receive it the amount agreed to be paid by one of the parties who entered into the agreement. Payment is not a contract. It is the discharge of a contract, in which the party of the first part has a right to demand payment," and the party of the second part has a right to make payment. 2 Dan. Neg. Instr. (3d ed.), § 1221.

See also, Moran v. Abbey, 63 Cal. 56. It is not a payment until the money has actually reached the hands of the party for whom it is intended, or his authorized agent. Remsen v. Wheeler, 105 N. Y. 573.

The agent of the debtor took money to the attorney of the creditor for the purpose of paying the debt. A dispute arose as to the correct amount tendered, and the money was handed to a bystander to count, said bystander being an officer who, at the time, held a writ of attachment against the creditor. The officer counted it, found the amount and then attached it as the property of

the creditor. The attorney of the creditor refused to consider the transaction a payment. But it was held to constitute a payment, even though it was shown that there was connivance between the agent of defendant and the party who attached the money. Root v. Ross, 29 Vt. 488.

Money paid to a person to whom it properly belongs, though under a mistake as to the right under which it ac crues to him, extinguishes the debt, and he cannot again enforce payment in his lawful right. Hemphill v. Moody, 64 Ala. 468.

Where A, having in his hands money belonging to B, agreed to apply it for the benefit of C, a creditor of B, the latter having neither authorized nor assented to the agreement, such arrangement would not operate as a payment of A's debt to B. Bowman v. Ainslie, I Idaho N. S. 644.

'A creditor cannot pay himself with the debtor's money without the debtor's consent, express or implied. If the debtor delivers him money for a purpose which negatives the idea of payment, the creditor must use it for the purpose for which it was given him. Detroit etc. R. Co. v. Smith, 50 Mich. 112.

The distinction is sometimes made between payment in law and payment in fact. Payment in fact is said to be an actual payment from the payor to the payee; payment in law a transaction equivalent to actual payment. Rap. & Lawr. Law Dict.

"In any transaction having in view the payment of an obligation, it is required that it shall be actually paid in order to discharge it, or that something shall be received by the creditor from the debtor under an express agreement that it shall operate as payment." People v. Cromwell, 102 N. Y. 477, 485.

Where money was forwarded by the debtor to the creditor, but the creditor refused to receive it and informed the debtor that the money was subject to his order, this was not a payment. Kingston Bank v. Gay, 19 Barb. (N. Y.) 459.

Where one of two joint makers paid the note, but by agreement between him and the payee the payment was kept a secret, and only half the amount was indorsed on the note, and an attempt was made to collect the balance of the co-maker, this constituted an extinguishment of the note, and the only liability of the co-maker was for contribution. Davis v. Stevens, 10 N. H. 186.

A, an agent of B, held funds of his principal to the full amount of bills drawn upon him by B, which the latter had delivered to his creditors. The creditors without B's knowledge, made a composition with A, and gave him up the bills upon receiving from him IOS. in the pound. B afterwards became bankrupt, and his assignee brought an action against A for the difference between the amount of the bills and the composition, but it was held that the assignee could not recover, since, as B was benefited to the full amount of the bills, as between him and A. the composition was a payment. Stonehouse v. Read, 5 Dowl. & Ry. Co, 3 B. & C. 669.

A cross demand cannot be treated as a payment, except by agreement to that effect between the parties. Wharton v. King, 69 Ala. 365, McCurdy v. Middleton, 82 Ala. 131, Rowland v. Blakes ley, 2 G. & Dav. 734, IQ B. 403, 6 Jur. 732, Livingston v. Whiting, 19 L. J., Q B. 528, 15 Q. B. 722, Smith v. Winter, 12 C. B. 487; 21 L. J., C. P. 158. Where A held B's note, and B, in making out an account current between himself and A, charged A with the note, and afterwards gave him credit for it, this did not constitute a payment of the note. Bettison v. Jennings, 11 Ark. 116. See Matossy v. Frosh, 9 Tex.

610.

Where one who is liable on a bill of exchange is a depositor in the bank holding the bill, and has a balance there to his credit, the bank cannot be compelled to appropriate such balance toward payment of the bill. Citizen's Bank v. Carson, 32 Mo. 191.

A draft upon a debtor having been indorsed and sent for collection to the bank where the debtor kept his account and where the debtor had funds sufficient to meet the draft, the bank, at the debtor's direction, charged up the amount of the draft to the debtor's account, and then drew its own check for the same amount payable to the creditor, but before the check was paid the bank closed its doors. Held, that the draft was paid. Welge v. Batty, 11 Ill. App. 461.

A, being the holder of a note payable at a certain bank, in which he was a depositor, sent it at maturity to that bank for payment, the bank, supposing the maker to be in funds, credited the amount of the note to A, but on discov. ering their mistake the next day, sent notices to the indorsers of non-payment.

Held, that the note had not been paid, Troy City Bank v. Grant, Hill & D Supp. (N. Y.) 119. See also, Dewey v. Bowers, 4 Ired. (N. Car.) 538.

Where a bank writes upon a check the word "good." or any similar word or words which indicate a statement that the drawer has funds in the bank applicable to the payment of the check, and that it will so apply them, this amounts to a payment as to the drawer and will discharge him. First National Bank v. Whitman, 94 U. S. 343; Meads v. Merchants' Bank, 25 N. Y. 143 s. c., 82 Am, Dec. 331, First Nat, Bank v. Leach, 52 N. Y. 350, s. c., 11 Am. Rep. 708.

The maker of a note payable at a cer tain bank, before maturity thereof, gave to the bank the check of a third person drawn on itself for the amount of the note. The check was by the bank placed with the note, and on the day of its maturity it was entered on the books of the bank as paid, and the ac count of the third person charged with the amount of the check. Held, that the note was paid, though the third person's account was at the time overdrawn. Pratt v. Foote, 10 N. Y. 599. See s. c., 9 N. Y. 463.

A bank, which was not accustomed to receive for collection checks drawn

upon itself, received a check drawn by one of its depositors in favor of another depositor, credited it in the pass book of the payee, placed it on the file of paid and cancelled checks where it was not the custom to place checks received for collection, and credited the payee and charged the drawer with it in the books of the bank. It was held that this constituted a payment of the check which could not be retracted upon discovery that it was an overdraft, and the drawer was insolvent. City Nat. Bank v. Burns, 68 Ala. 267; 8. C., 44 Am. Rep 138.

This decision is placed on the ground that the evidence clearly shows that the check was not taken for collection. For the mere receipt of a check and entering it in the depositor's bank book does not ordinarily constitute a payment of it, though it is drawn on the bank where it is deposited. Morse on Banking 320. In the opinion of BRICKELL, C. J., in the above case, two decisions are referred to as maintaining this view: Boyd v. Emerson, 2. Ad. & El. 184; Kilsby v. Williams, 5 B & Ald. 815. But the court holds that in the case before it the check was not taken for

collection, and that it falls within the principal of Bolton v. Richard, 6 T. R. 139, where it was held that when a bank credits a depositor with the amount of a check drawn upon it by another customer and there is no want of good faith on the part of the depositor, the act of crediting is equivalent to a payment in money. This is the view taken by the Supreme Court of the United States in First Nat. Bank v. Burkhardt, 100 U. S. 686, and the other cases cited in the opinion. Compare Watervliet Bank v. White, 1 Den. (N. Y.) 608; McLemore v. Hawkins, 46 Miss. 716; Nightingale v. City Bank, 26 Up. Can. C. P. 74.

A bank in Nashville discounted a note for the benefit of a bank in Knoxville, the same being indorsed by defendant, and by the Knoxville bank. The banks were regular correspondents of each other and settled their accounts monthly. At the maturity of the note, the Nashville bank sent it to the Knoxville bank with instructions to collect and credit. The latter bank entered the amount on its books to the credit the former. At that time the Knoxville bank had money sufficient to pay the note, but no money was actually paid, and the bank was then insolvent. Two days afterward it closed its doors. Held, that this constituted a payment, and that defendant was not liable. First Nat. Bank. v. McClung, 7 Lea (Tenn.) 492; s. c., 40 Am. Rep. 66. Compare Warwick v. Rogers, 5 Man. & G. 340; 6. c., 6 Scott (N.R.) 1; Prince v. Oriental Bank, L. R., 3 App. 325; s. C., 24 Moak's Rep. 221.

It was the course of business between a banker and his customer that when claims against the customer were sent to the banker, he should pay them out of the customer's deposits, if he had any, and charge them in the account. A particular claim against the customer was sent the banker for collection, to pay which and others the depositor placed money with the banker with directions to use it in paying those claims. Before the money was so applied the banker failed. It was held that the customer was still liable on the claims. Moore v. Meyer, 57 Ala. 20.

In October the creditor authorized the debtor to pay in at certain bankers the amount of the debt. Owing to a mistake it was not then paid; but on Friday, the 9th of December, the debtor, who kept an account at the same bank, transferred the sum to the credit of the

creditor. The latter being at a distance did not receive notice of the transfer till the following Sunday, and on Saturday the bankers failed. Held, that this was a good payment. Eyles v. Ellis, 4 Bing: 112; 12 Moore 306. Compare Brown v. Kewley, 2 Bos. & Pul. 518.

A purchased goods of B and agreed to pay for them by bill at three months. A gave B a check on his bankers, who were also the bankers of B, requiring them to pay B on demand in a bill at three months. B paid the check in at the bankers, but instead of taking a bill from them the amount was transferred on the books of the bank from A's account to B's, with the knowledge of both. The bankers failed before the check became due. Held, that B could not recover from A the value of the goods. Bolton v. Richard, 6 T. R. 139; 1 Esp. 100. See Smith v. Ferrard, 7 B. & C. 19; 9 Dow. & Ry. 803: and compare Pedder v. Watt, 2 Chit. 619.

Where plaintiff's attorney wrote to the defendant to remit the balance of the account due plaintiff, with costs, and defendant remitted by post a banker's bill payable at sight for the account, without costs, and the attorney wrote refusing to accept the bill unless the costs were also remitted, but kept the bill, though he did not cash it, the payment was held to be good, as it was the duty of the attorney to return the banker's bill if he did not choose to receive it in payment. Caine v. Coulson, 32 L. J., Exch. 97; s. c., 1 H. & C. 764; s. c., 11 W. R. 239.

A judgment debtor sent money by his son to the clerk of the court to be paid to the judgment creditor. The clerk deposited the money in bank in his own name with a memorandum showing for whom it was intended. A few months afterwards the debtor inquired of the creditor if he had been paid, and the latter replied: "No, but the money is deposited in the bank for me." The clerk subsequently died, and the creditor not having applied for the money, the administrator paid it back to the son of the debtor. Held, that there was no acceptance of the money, and the debt was still due. Moore v. Tate, 22 Gratt. (Va.) 351.

B offered to sell a promissory note owned by him for $500. V, who was the holder of a note executed by B for $488, proposed to purchase the note held by B for the price asked, and having requested to see it, the note

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