and the residue to that part of the principal which first becomes due; but if nothing is due it is to be applied ratably to principal and interest, so as to extinguish a part of the principal and the interest which has accrued on the part so extinguished. Jencks v. Alexander, II Paige (N. Y.) 619; Miami Exporting Co. v. Bank of Ú. S., 5 Ohio 260; Mills v. Saunders, 4 Neb. 190; McCormick v. Mitchell, 57 Ind. 248. See Starr v. Richmond, 30 Ill. 276; s. c., 83 Am. Dec. 189; McElrath v. Duprey, 2 La. Ann. 520.

Where interest on a note is paid in advance for a stipulated time, and the principal is paid before the expiration of that time, the excess of interest is to be appled as so much paid on the principal. Freeman's Bank v. Rollins, 13 Me. 202.

Where one of two obligors in a joint and several bond became bankrupt, dividends paid on his estate are, as to the co-obligor, to be considered as ordinary payments on account, and are to be applied first to the payment of interest due at the date of the dividend, and the surplus, if any, in reduction of the principal. Bower v. Marris, 1 Craig & Ph. 351.

Where accrued interest itself bears interest, payments will be applied: First, to the interest on the interest; secondly, to the interest on the principal; thirdly, to the principal. Anketel v. Converse, 17 Ohio St. 11; s. c., 91 Am. Dec. 115. Where several sales were made simultaneously by the same vendor to the same vendee at various prices, the purchase money to be paid in equal instalments in one, two and three years, bearing the same interest, after maturity of the last instalment the whole debt is to be treated as one, and payments made generally must be applied first to all accrued interest on the entire debt and the surplus to the entire principal. Smith v. Nettles, 9 La. Ann. 455. To same effect. Genin v. Ingersoll, 11 W. Va. 549.

Where some of the makers of a joint and several note make payments of their shares of the principal and interest due from them at the time thereof, such payments must be applied to the pro

rata of principal as well as interest due by the makers so paying. Donaldson v. Cothran, 60 Ga. 603.

As to what is sufficient part payment under the Statute of Frauds, see STATUTE OF FRAUDS, vol. 8, p. 659.

1. 3 Phil. Evid. (Hill & Cowen's Notes) *441; 1 Amer. Lead. Cas. *276 (3rd ed. 288); Mayor etc. of Alexandria v. Patten, 4 Cranch (U. S.) 317; Tayler v. Sandiford, 7 Wheat (U. S.) 13; Leef v. Goodwin, Taney Dec. (U. S.) 460; Sherwood v. Haight, 26 Conn. 432; Pickering v. Day, 2 Del. Ch. 333; 8. C., on appeal, 3 Houst. (Del.) 474; S. C., 95 Am. Dec. 291; Semmes v Boykin, 27 Ga. 47; Whitaker v. Groover, 54 Ga. 174; Coleman v. Slade, 75 Ga. 61; Hatcher v. Conner, 75 Ga. 728; Jack son v. Bailey, 12 Ill. 159; Forelander v: Hicks, 6 Ind. 448; King v. Andrews, 30 Ind. 429; Trentman v. Fletcher, 100 Ind. 105; Ross v. Crane, 74 Iowa 375; Irwin v. Paulett, 1 Kan. 418; Nuttall v. Brannin, 5 Bush (Ky.) 11; McDaniel v. Barnes, 5 Bush (Ky.) 183; Bloodworthn v. Jacobs, 2 La. Ann. 24; Adams v. Bank of Louisiana, 3 La. Ann. 351; Robson v. McKoin, 18 La. Ann. 544; Treadwell v. Moore, 34 Me. 112; Mitchell v. Dall, 2 Har. & G. (Md.) 159; s. c., 4 Gill & J. (Md.) 461; Calvert v. Carter, 18 Md. 73; Dickey v. Permanent Land Co., 63 Md. 170; Gilchrist v. Ward, 4 Mass. 692; Hall v. Marston, 17 Mass. 575; Bonaffe v. Woodberry, 12 Pick. (Mass.) 463; Hussey v. Manufacturers' etc. Bank, 10 Pick. (Mass.) 415; Reed v. Boardman, 20 Pick. (Mass.) 441; Solomon v. Dreschler, 4 Minn. 278; Brady v. Hill, 1 Mo. 317; s. c., 13 Am. Dec. 503; Gartner v. Kemfer, 58 Mo. 570; Poulson v. Collier, 18 Mo. App. 583; Bean v. Brown, 54 N. H. 395; Martin v. Draher, 5 Watts (Pa.) 544; Black v. Shooler, 2 McCord (S. Car.) 293; McDonald v. Pickett, 2 Bailey (S. Car.) 617; McKee v. Stroup, 1 Rice (S. Car.) 291; Bell v. Bell, 20 S. Car. 34; Willis v. McIntyre, 70 Tex. 34; Lapham v. Kelley, 35 Vt. 195; Jones v. Williams, 39 Wis. 300; Champenois v. Fort, 45 Miss. 356.

The rule of the text applies only to payments voluntarily made, and not to those made by process of law. Black

stone Bank v. Hill, 10 Pick. (Mass.) 129.

By the terms of a mortgage all the notes became due and payable upon default as to those first falling due. Those first falling due were indorsed; and upon default of payment of these, the mortgage was foreclosed. It was held that the debtor could not insist that the notes first maturing should be paid from the proceeds, but that the creditor had the right to make the application. Nichols v. Knowles, 3 McCrary (U. S.) 477; s. c., 17 Fed. Rep.

494.

Where an officer has served two successive terms, with different sets of sureties for each term, he may appropriate funds collected during his second term, to discharge a deficit of his first term if the county treasurer receives the money in good faith. State v. Smith, 26 Mo. 226; s. c., 72 Am. Dec. 204. See Draffen v. Boonville, 8 Mo. 395; St. Joseph v. Merlatt, 26 Mo. 233; s. C., 72 Am. Dec. 207; Seymour v. Van Slyck, 8 Wend. (N. Y.) 403.

In the following additional cases the rule governing the debtor's right to apply payments is discussed: Greer v. Turner, 47 Ark. 17; Whipple v. Crocker, 6 Ill. App. 133; Sankey v. Cook, 78 Iowa 419; Kahler v. Hanson, 53 Iowa 698; Fowke v. Bowie, 4 Har. & J. (Md.) 566; Shelden v. Bennett, 44 Mich. 634; Vaughan v. Powell, 65 Miss. 401; Lauten v. Rowan, 59 N. H. 215; Boyd v. Webster, 59 N. H. S9; Long v. Miller, 93 N. Car. 233; Moorehead v. West Branch Bank, 3 W. & S. (Pa.) 550; Bray v. Crain, 59 Tex. 649; Roakes v. Bailey, 55 Vt. 542; Webster v. Mitch ell, 22 Fed. Rep. 869.

1. Wharton on Cont. 923; Benj. on Sales 746; Levystein v. Whitman, 59 Ala. 345; Reed v. Boardman, 20 Pick. (Mass.) 443; Smuller v. Union Canal Co., 37 Pa. St. 68; Godfrey v. Warner, Hill & D. Supp. (N. Y.) 32; Eylar v. Read, 60 Tex. 387; Runyon v. Latham, 5 Ired. L. (N. Car.) 551; Stewart v. Hopkins, 30 Ohio St. 502.

And if the creditor fails to sc apply it, he cannot complain if he is com

pelled to make the application, even though he thereby loses the debt to which he attempted to apply it, by reason of its becoming barred by limitation. Eylar v. Reed, 60 Tex. 387.

Where A, being indebted to B both on mortgage and open account, sent B money with instructions to apply it to the mortgage note, and B failed so to do, he is liable to A's assignee in bankruptcy for the amount, and in a suit by said assignee for the amount B cannot plead the account as a set-off. Libby v. Hopkins, 104 U. S. 303.

And the debtor is not estopped to insist on the appropriation designated by him, though he accept a receipt showing a different appropriation by the creditor. Eylar v. Read, 60 Tex. 387. See Starkweather v. Kittle, 17 Wend. (N. Y.) 20 (per Bronson, J.).

It matters not that the creditor refuses to accept the application made by the debtor at the time of payment. If he receives the money he is bound by the appropriation made. Anonymous, Cro. Eliz. 68; Pinnell's Case, 5 Coke 117; Colt v. Nettleville, 2 P. Wms. 304; Thomas v. Cross, 7 Exch. 728; Randall v. Parramore, 1 Fla. 410; Bayley v. Wynkoff, 5 Ill. 449; Jackson v. Bailey, 12 Ill. 161; Bosley v. Porter, 4 J. J. Marsh. (Ky.) 621; Hussey v. Manufacturers' etc. Bank, 10 Pick. (Mass.) 415; Reed v. Boardman, 20 Pick. (Mass.) 441; Caldwell v. Wentworth, 14 N. H. 431; Long v. Miller, 93 N. Car. 233; Martin v. Draher, 5 Watts (Pa.) 544; Boutwell v. Mason, 12 Vt. 608; Black v. Shooler, 2 McCord (S. Car.) 293; McDonald v. Pickett, 2 Bailey (S. Car.) 617.

While a creditor is not bound to receive payment on an account not due, yet if he does receive it he is bound to apply it in accordance with the directions of the debtor. Thus, if a part of a debt not due is secured by guaranty, and the guarantor and debtor send money to the creditor with directions to apply the same to their account, the creditor is not at liberty to apply it to a part of the account which is due and

not covered by the guaranty. Wetherell v. Joy, 40 Me. 325.

A being indebted to B and C, drew on B in favor of C, which draft B accepted upon receiving a mortgage from C conditioned that C would see that funds were provided to meet the drafts when they matured. Under an agreement between A and C, the former shipped produce to B, the proceeds to be applied to the payment of the drafts, and afterwards by letter directed B to dispose of the produce as he should see proper. B applied the proceeds first to the extinguishment of A's debt to him, and the balance to the payment of the drafts. In a proceeding to foreclose the mortgage it was held that the whole of the proceeds should have been applied to the payment of the drafts, and that the direction-to dispose of the produce as he thought proper did not authorize B to use the proceeds as he pleased. Sproule v. Samuel, 5 Ill. 135.

A bank discounted a note for B, a town treasurer, the proceeds to be used in his official capacity, which note was indorsed by P. The day before this note matured, a personal note of B to the bank matured, and the president of the bank directed the cashier to apply the balance of B's account to the personal note. Three days afterwards, P presented B's cheque to the bank, in which he directed the balance of his account to be applied to the official note. This the cashier refused to do, and brought suit on the official note. Held, that neither B nor P could insist that B's balance should be applied on the note sued on. National Mahaiwe Bank v. Peck, 127 Mass. 298; s. c., 34 Am. Rep. 368.

A creditor cannot compel application of a payment to a debt barred by limitation by merely expressing his wish to that effect to the debtor. There must be an express assent by the debtor, or it must be shown that the debtor did not object to the positive statement by the creditor that he should make such application. Sitterly v. Gregg, 22 Hun (N. Y.) 258. Where interest is due on the debt,

the debtor may, without the consent of the creditor, apply a payment to the reduction of the principal, without first paying off the interest. Pindall v. Bank of Marietta, 10 Leigh (Va.) 484; Miller v. Trevilian, 2 Rob. (Va.) Compare Johnson v. Robbins, 20 La. Ann. 569. And see Steele v. Taylor, 4 Dana (Ky.) 445.

I.

Where money is placed in the hands of an agent to pay two notes held by the same party, and such fact is known to the holder, he will not be allowed by means of an attachment suit on one of the notes to appropriate the whole to the payment of such note. Jones v. Perkins, 29 Miss. 139; s. c., 64 Am. Dec. 136.

A debtor intrusted money to an agent to compromise certain claims held by a creditor. The debtor depos ited the money thus intrusted to him, together with money of his own, with the creditor in the agent's own name. Afterwards the creditor caused the money deposited to be attached, and refused to return the agent's own money unless he would apply that belonging to the debtor to one of the claims for which there was no security. This the agent did under protest, and without the knowledge of the debtor. Held, that the debtor was not thereby deprived of his right to apply the money to either of the claims he saw fit. Dennis v. M'Laurin, 31 Miss. 606.

If the debtor directs the appropriation, a court of equity has no power to change the appropriation. Selfridge v. Northampton Bank, 8 W. & S. (Pa.) 320.

1. Aderholt v. Embry, 78 Ala. 185; McCurdy v. Middleton, 82 Ala. 131; Long v. Miller, 93 N. Car. 233; Reynolds v. McFarlane, 1 Overt. (Tenn.) 488. Compare Wittkowsky v. Reid, 82 N. Car. 116.

And the burden is on the debtor to show that he directed the application. Thatcher v. Massey, 26 S. Car. 155; Harrison v. Dayries, 23 La. Ann. 216;

Where cotton is shipped by a debtor to a creditor holding two demands, the direction as to the application must be made at the time of shipment

and not at the time of sale. Frost v. Weathersbee, 23 S. Car. 354

1. Am. Lead. Cas. (3d ed.) 290; Waters v. Tompkins, 2 Cr. Mees. & R. 723; 1 Tyr. & G. 137; Peters v. Anderson, 5 Taunt. 596; Newmarch v. Clay, 14 East 239; Cross v. Johnson, 30 Ark. 396; Howland v. Rencle, 7 Blackf. (Ind.) 236; Adams Express Co. v. Black, 62 Ind. 128; Poulson v. Collier, 18 Mo. App. 583; Mitchell v. Dall, 2 Har. & G. (Md.) 159; Terhune v. Colton, 12 N. J. Eq. 233, 312; Stone v. Seymour, 15 Wend. (N. Y.) 19, 24; 22 Wend. (N. Y.) 554; Wittkowsky v. Reid, 82 N. Car. 116; Moorehead v. West Branch Bank, 5 W. & S. (Pa.) 542; Stewart v. Keith, 12 Pa. St. 238; Hill v. Gregory, Wythe (Va.) 13; Champenois v. Fort, 45 Miss. 356.

If the debtor at the time of making the payment makes an entry in his books, showing a specific appropriation, and at the same time shows the entry to the creditor, this is such an appropriation by the debtor as would be binding on the creditor. Frazer v. Bunn, 8 Car. & P. 704.

The receipt may show the application. Stewart v. Keith, 12 Pa. St. 238.

But the intention of the debtor, uncommunicated to the creditor, to apply the payment to a particular debt, cannot affect the creditor's right to make the application. Munger App. Payt. 28; Long v. Miller, 93 N. Car. 233; Brice v. Hamilton, 12 S. Car. 32. It is not necessary that the intention should be manifested by a writing. Ilsley v. Jewett, 2 Met. (Mass.) 168.

The expression of a wish by the debtor is sufficient. Hansen v. Rounsavel, 74 Ill. 238. Or the declarations of the bearer of the money at the time of delivering it to the creditor. Gay v. Gay, 5 Allen (Mass.) 157.

The same rules apply to a payment in property as to a payment in money. Smith v. Vaughan, 78 Ala. 201.

Where a debtor receives without objection an account current from his creditor, which imputes payments made by him to the less onerous part of his debt, he is held by his silence to

ratify such imputation. McLear v. Hunsicker, 30 La. Ann., pt. 2, 1225.

If from the very nature of the transaction it appears to be the intention of the debtor that the money shall be appropriated to a particular debt, the creditor cannot make another and different appropriation of it. Phillips v. McGuire, 73 Ga. 517; Holley v. Hardeman, 76 Ga. 328.

The facts in the latter case were as follows: H & G held a note and mortgage to secure the same executed by A. They subsequently purchased two promissory notes made by A, of which fact A was ignorant. A sent H & G certain cotton to sell and pay upon the indebtedness which he owed them. H & G applied the proceeds of the cotton to the payment of the two notes purchased by them, and proceeded to foreclose the mortgage. It was held that the note secured by the mortgage was paid by the proceeds of the cotton. Holley v. Hardeman, 76 Ga. 328.

To same effect, Marx v. Schwartz, 14 Oregon 177. Compare Stewart v. Hopkins, 30 Ohio St. 502.

Where the payment was precisely the amount of one debt and not of another, it may properly be inferred that the debtor intended it should be appropriated to the former. Robert v. Garnie, 3 Cai. Cas. (N. Y.) 14; Seymour v. Van Slyck, 8 Wend. (N. Y.) 403; Davis v. Fargo, Clarke Ch. (N. Y.) 470.

The question whether there has been an appropriation is one for the jury. Walker v. Butler, 6 El. & Bl. 506; 25 L. J., Q. B. 377; 2 Jur. N. S. 687.

2. 1 Amer. Lead Cas. *276; Mayor etc. of Alexandria v. Patten, 4 Cranch (U. S.) 316; United States v. Bradbury, Dav. (U. S.) 146; Bobe v. Stickney, 36 Ala. 482; Johnson v. Thomas, 77 Ala. 367; Marshall v. Sloan, 26 Ark. 513; Bell v. Radcliff, 32 Ark. 645; Blinn v. Chester, 5 Day (Conn.) 166; Pickering v. Day, 2 Del. Ch. 333; s. c., on appeal, 4 Houst. 474; s. c., 95 Am. Dec. 291; Randall v. Parramore, 1 Fla. 409; Hargroves v. Cooke, 15 Ga. 321; Johnson v. Johnson, 30 Ga. 857; Holmes v.

Pratt, 34 Ga. 557; Perry v. Bozeman, 67 Ga. 643; Howland v. Rench, 7 Blackf. (Ind.) 236; Fargo v. Buell, i Iowa, 292; Brewer v. Knapp, 1 Pick. (Mass.) 332; Blackstone Bank v. Hill, 10 Pick. (Mass.) 129; Crisler v. McCoy, 33 Miss. 445; Brady v. Hill, 1 Mo. 315; s. c., 13 Am. Dec. 503; Middleton v. Frame, 21 Mo. 412; Waterman v. Younger, 49 Mo. 413; Sawyer v. Tappan, 14 N. H. 352; Sickle v. Ayres, 6 N. J. Eq. 29; Bird v. Davis, 14 N. J. Eq. 467; Seymour v. Marvin, 11 Barb. (N. Y.) 80; California Bank v. Webb, 48 N. Y. Super. Ct. 175; Wittkowski v. Reid, 84 N. Car. 21; Logan v. Mason, 6 W. & S. (Pa.) 9; Watt v. Hoch, 25 Pa. St. 411; Smith v. Screven, 1 McCord (S. Car.) 368; Ayer v. Hawkins, 19 Vt. 26; Howard v. McCall, 21 Gratt. (Va.) 205; Stone v. Talbot, 4 Wis. 442; Campbell v. Hodgson, Gow. 74; Hall v. Wood, 14 East 243, n.; Peters v. Anderson, 5 Taunt. 596; 1 Marsh 238. Compare Lamprell v. Billericay Union, 3 Exch. 283; 18 L. J. Exch. 283; Thompson v. Hudson, 6 L. R., Ch. 320; 40 L. J., Ch. 28.

The rule is subject to the condition that there are no circumstances which would render the exercise of the discretion by the creditor unreasonable, or which would enable him to work injustice to the debtor. Arnold 7'. Johnson, 2 Ill. 196; Ayer 7. Hawkins, 19 Vt. 26; Taylor v. Coleman, 20 Tex. 772.

He is not bound to apply the payment to the oldest claim. Maguire v. Filley, 9 Mo. App. 586.

If the creditor holds several notes of the same debtor, he may apply a payment to a part only of the notes, and is not bound to apply it to all pro rata. Blackman v. Leonard, 15 La. Ann. 59. And it has been held that he must apply the whole on one note, and not pro rata, where the sum received is less than the amount due on either note. Wheeler v. House, 27 Vt. 735. Compare Taylor v. Foster, 132 Mass. 30. But a surety on one of the notes may insist upon a pro rata appropriation to such note. Blackstone Bank v. Hill, 10 Pick. (Mass.) 129. Compare Clark v. Smith, 13 S. Car. 585.

Where the creditor holds a debt due to himself, and another from the same debtor due to himself and a third party, he must apply all payments ratably on

the two debts. Colby v. Copp, 35 N. H. 434.

A purchased and from B, which was encumbered by a mortgage from B to C, as agent of D. C also held a debt in his own right against B. A paid money to C on B's account, not knowing of the latter's indebtedness to C individually, and made no express appropriation of the payment. Held, that C could not apply the payment to the individual indebtedness, but would be held to appropriate it to reduce the encumbrance on the land. Poindexter v. LaRoche, 7 Smed. & M. (Miss.) 699.

V.

Where the creditor credits the money on an open account, it will be held that he intended to apply the payment to the earliest items of the account, even though those are the only ones secured. Van Rensselaer Roberts, 5 Den. (N. Y.) 470; Crompton v. Pratt, 105 Mass. 255. And notwithstanding they were barred by limitation. Hill v. Robbins, 22 Mich., 475.

The creditor may make the application to any valid demand, whether the debtor acknowledge his liability thereon or not. McLendon v. Frost, 57 Ga. 448; Lee v. Early, 44 Md. 8o. But it is for the creditor to prove the existence and validity of such demand. Mann v. Mayor, 6 Rob. (La.) 475. See Trundle v. Williams, 4 Gill (Md.) 313.

Where A, who is indebted to B, and also to B and C jointly, makes a shipment to B to apply the proceeds on the individual debt, and there is a surplus after extinguishing this debt, B may retain such surplus and apply it on the joint debt, but not on his own part of the joint debt to the exclusion of C. Cole v. Trull, 9 Pick. (Mass.) 325.

Where an attorney has in his hands the claims of several creditors against the same debtor, all of which are due, and the debtor makes a payment to the attorney without designating the debt to which he wishes it applied, the attorney may apply it to such of the debts as he sees fit. Carpenter v. Goin, 19 N. H. 479. Or the several creditors may direct its application. Taylor v. Jones, 1 Ind. 17.

If the owner of any one of the notes has in fact received no part of such payment, the maker cannot, in an action brought on such note, insist that any part of such payment shall be appro