Where a person owes several debts to another, or owes on an account consisting of several different items, and makes a part payment, the question arises as to which debt is discharged. As a rule, the debtor has a right to say which debt he will pay, and he may show his intention in this respect by his conduct, or it may otherwise be inferred from the circumstances.5 If the creditor receives the payment, he is bound to apply it as expressly or impliedly directed.6
If the debtor does not direct the application, at the time of the payment,7 the creditor, as a rule, may apply it as he may see fit.8 He may apply it, for instance, to a debt which is barred by the statute of limitations, in preference to another which is not barred.9 Having once made the application, he cannot change it without the debtor's consent.10
3 Sayer v. Wagstaff, 5 Beav. 423; Happy v. Mosher, 48 N. Y. 313; Hall v. Richardson, 16 Md. 396, 77 Am. Dec. 303; Lupton v. Freeman, 82 Mich. 638. 46 N. W. 1042; Morrison v. Smith, 81 111. 221; Fry v. Patterson, 49 N. J. Law. 6. 12, 10 Atl. 390; Hays v. McClurg. 4 Watts (Pa.) 452; Barnet v. Smith, 30 N. H. 256, 64 Am. Dec. 290. See. also, the cases cited in note 2, supra. See "Payment," Dec Dig. (Key-No.) §§ 16-23; Cent. Dig. §§ 63-90.
4 Robinson v. Read, 9 Barn. & C. 449; Sayer v. Wagstaff, 5 Beav. 415. See "Payment," Dec. Dig. (Key-No.) % 1; Cent. Dig. §§ 1, 3, 4, 24.
5 Stone v. Seymour, 15 Wend. (N. Y.) 19; Seymour v. Van Slyck, 8 Wend. (N. Y.) 403; Tayloe v. Sandiford, 7 Wheat. 13, 5 L. Ed. 384; Fowke v. Bowie, 4 Har. & J. (Md.) 566; Hansen v. Rounsavell, 74 111. 238; Stewart v. Keith, 12 Pa. 238; Sawyer v. Tappan, 14 N. H 352; Cavanagh v. Marble, 80 Conn. 389, 68 Atl. 853, 15 L. R. A. (N. S.) 127. See "Payment," Dec. Dig. (Key-No.) § 38; Cent. Dig. §§ 99-103, 128.
6 Patty v. Milne, 16 Wend. (N. Y.) 557; Miln v. Patty, 22 Wend. (N. Y.) 558; Ellis v. Mason, 32 S. C. 277, 10 S. E. 1069; Washington Natural Gas Co. v. Johnson, 123 Pa. 576, 16 Atl. 799, 10 Am. St. Rep. 553; Atkinson v. Cox, 54 Ark. 444, 16 S. W. 124; Stewart v. Hopkins, 30 Ohio St. 502; Weth-erell v. Jay, 40 Me. 325; Champenois v. Fort, 45 Miss. 355; Runyan v. Latham, 27 N. C. 551; Benson v. Reinshagen, 75 N. J. Eq. 358, 72 Atl. 954 (although the creditor does not assent to such application). Cf. Flarsheim v. Brestrup, 43 Minn. 298, 45 N. W. 438. See "Payment," Dec. Dig. (Key-No.) § 38; Cent. Dig. §§ 99-103, 128.
If neither party makes an appropriation of the payment, the law will apply it. According to the civil law, the presumable intention of the debtor was resorted to as the rule to determine the application, and, in the absence of express declaration by either party, the payment was applied in the way that would be most beneficial to the debtor. "The payment was consequently applied to the most burdensome debt - to one that carried interest, rather than to that which carried none; to one secured by a penalty, rather than to that which rested on a simple stipulation; and, if the debts were equal, then to that which had been first contracted." 11 This rule has been adopted in a number of cases both in England and in this country. In a well-considered New York case the rule was approved after a full review of the authorities, and a payment was applied to a mortgage and a judgment debt in preference to an account, because the former would bear most heavily on the debtor.12 Many of the courts, on the other hand, have adopted a rule to some extent directly opposed to the civil-law rule. "If the application is made by neither party,", it has been said by the supreme court of the United States, "it becomes the duty of the court, and in its exercise a sound discretion is to be exercised. It cannot be conceded that this application is to be made in a manner most advantageous to the debtor. * * * It would seem reasonable that an equitable application should be made; and, it being equitable that the whole debt should be paid, it cannot be inequitable to extinguish first those debts for which the security is most precarious." In this case the payment was applied to other demands rather than to a judgment debt, on the ground that the former were not so well secured.13 Probably most of the courts in this' country follow the rule just stated, though with some qualification. It is very generally said that an equitable application will be made; that is,
7 Pearce' v. Walker, 103 Ala. 250, 15 South. 568. See "Payment," Dec. Dig. (Key-No.) § 39; Cent. Dig. §§ 104-114.
8 Mayor, etc., of Alexandria v. Patten, 4 Cranch, 317, 2 L. Ed. 633; Harding v. Tifft, 75 N. Y. 461; First Nat Bank of Fair Haven v. Johnson, 65 Vt. 3S2, 26 Atl. 634; Whitaker v. Groover, 54 Ga. 174; Jones v. Williams, 39 Wis. 300; Case v. Fant, 53 Fed. 41, 3 C. C. A. 418; Henry Bill Pub. Co. v. Utley, 155 Mass. 366, 29 N. E. 635; Lee v. Early, 44 Md. 80; Senter v. Williams (Ark.) 17 S. W. 1029; Beck v. Haas, 111 Mo. 264, 20 S. W. 19, 33 Am. St. Rep. 516; Howard v. McCall, 21 Grat. (Va.) 205; Perot v. Cooper, 17 Colo. 80, 28 Pac. 391, 31 Am. St. Rep. 258; Jefferson v. Church of St. Matthew, 41 Minn. 392, 43 N. W. 74; Byrnes v. Claffey, 69 Cal. 120, 10 Pac. 321; Koch v. Roth, 150 111. 212, 37 N. E. 317. The creditor cannot, without the debtor's consent, apply the payment to an illegal claim, Anderson v. Griffith, 51 Or. 116, 93 Pac. 934; Phillips v. Moses, 65 Me. 70; Pickett v. Bank, 32 Ark. 346; McCausland v. Ralston, 12 Nev. 195, 28 Am. Rep. 781; Caldwell v. Wentworth, 14 N. H. 431; Bancroft v. Dumas, 21 Vt. 456; Rohan v. Hanson, 11 Cush. (Mass.) 44; Kidder v. Norris. 18 N. H. 532; unless the debtor consents, Brown v. Burns, 67 Me. 535; Feldman v. Gamble, 26 N. J. Eq. 494. But he may apply it to a debt which is merely unenforceable, and not illegal. Haynes v. Nice, 100 Mass. 327, 1 Am. Rep. 109; Ayer v. Hawkins, 19 Vt. 26; Murphy v. Webber, 61 Me. 478. He cannot apply it to a debt not yet due. Heard v. Pulaski, 80 Ala. 502, 2 South. 343; Bobe's Heirs v. Stickney, 36 Ala. 482. May apply it to either a joint or an individual note of the same debtor. McBride v. Noble, 40 Colo. 372, 90 Pac. 1037, 13 Ann. Cas. 1202. The application must be made within a reasonable time, or it will be applied by law. Harker v. Conrad, 12 Serg. & R. (Pa.) 301, 14 Am. Dec. 691. See "Payment," Dec. Dig. (Key-No.) § SO: Cent. Dig. §§ 104-114.