Generally, the law favors the surety, especially if his suretyship be not for a previously existing debt. So, where one has given security for the payment for goods to be afterwards supplied to his principal, and such goods are supplied, and general payments made by the principal, who was otherwise indebted to the party supplying the goods, it would be inferred in favor of the surety, that the payments were intended to be made in liquidation of the account which he had guaranteed. (f) l But * where an obligor makes a general payment to his obligee, to whom he is indebted, not only on the bond but otherwise, the surety of the obligor cannot require that the payment should be applied to the bond, unless aided by circumstances which show that such application was intended by the obligor. (g)

(f) Marryatts v. White, 2 Stark. 101. In this case a son-in-law of the defendant being indebted to the plaintiff, and wishing to obtain a further credit for some flour, the defendant became his surety by giving his note to the plaintiff, but with a stipulation that it should operate as a security for the flour to be delivered, and not for the debt which then existed. The term of credit on sales of flour was three months, and discount was allowed for earlier payment. After the delivery of the flour the son-in-law made several payments on account generally; but upon all those which were made within three months from the time the flour was delivered, the usual discount was allowed. Held, that this was evidence that all the payments were to go to pay for the flour, and not to discharge the pre-existing debt. And Lord Ellenborough, said: "I think that in favor of a surety, such payments are to be considered as paid on the latter account. In some instances the payments were immediate, and in others before the time had expired within which a discount was allowed; ex pluribus disce omnes. Where there is nothing to show the animus solventis, the payment may certainly be applied by the party who receives the money. The payment of the exact amount of goods previously supplied is irrefragable evidence to show that the sum was intended in payment of those goods; and the payment of sums within the time allowed for discount, and on which discount has been allowed, affords a strong inference, in the absence of proof to the contrary, that it is made in relief of the surety." See Kirby v. The Duke of Marlborough, 2 M. & S. 18; Pierce v. Knight, 31 Vt. 701.

(g) Plomer v. Long, 1 Stark. 153. In Martin v. Brecknell, 2 M. & S. 39, it was held, that the obligee of a bond, given by principal and surety, conditioned for the payment of money by instalments, who has proved under a commission of bankruptcy against the principal the whole debt, and received a dividend thereon of

1 Hansen v. Rounsavell, 74 Ill. 238. The mere fact that there is a surety for one of two debts does not preclude the creditor from applying a payment received from the debtor, with no direction given, to the debt for which he has no security. Harding v. Tuft, 75 N. Y. 461. Hanford v. Robertson, 47 Mich. 100, held, that where the debtor to obtain a loan gave two notes secured by a mortgage, one at the creditor's request being additionally secured by a surety, the proceeds of a foreclosure sale must be applied to discharge the note not secured by a surety. Where by an express agreement, or by a course of dealing, between a bank and one of its depositors, a certain note of the depositor is not included in the general account between them, any balance due from the bank to him when the note becomes payable is not to be applied in satisfaction of the note, even for the benefit of a surety thereon, except at the election of the bank, National Mahaiwe Bank v. Peck, 127 Mass. 298, in which case the doctrine of "appropriation" generally is discussed. Where a mortgage for $10,000 was given to a bank to secure to that extent an indebtedness of $17,000, the mortgagor's grantee, to whom the land was conveyed with warranty, can insist that payments to the amount of $12,000, made generally by the mortgagor, shall be applied in extinguishment of the mortgage. Fridley v. Bowen, 103 Ill. 633.

In cases of payments which are not made by the debtor voluntarily, the creditor has no right of appropriation, but must apply the money towards the discharge of all the debts in proportion. (h) A question has been made as to the manner of making up the account where partial payments have been made at different times oh bonds, notes, or other securities. Interest may be cast in three ways. It may be cast on the whole sum to the day of making up the account, and also upon each payment from the time when made to the same day, and the difference between these sums is the amount then due. Or interest may be cast on the whole sum to the day of the first payment, and added to the original debt, and, the payment being deducted, on the remainder, interest is cast to the next payment, and so on. The objection to this method is, that if the payment to be deducted is not equal to the interest which has been added to the original sum, then a part of this interest enters into the remainder, on which interest is cast, and thus the creditor receives compound interest. A third method is, to compute the interest on the principal sum from the time when interest became payable to the first time when a payment, alone, or in conjunction with preceding payments with interest cast on them, shall equal or exceed the interest due on the principal. Deduct this sum, and cast interest on the balance as before. In this way payments are applied first to keep down the interest, and then to diminish the principal of the debt, and the creditor does not receive compound interest. This last method has been adopted in Massachusetts by decision, and generally prevails. (i)

2s. and 7d. in the pound, may recover against the surety an instalment due, making a deduction of 2s. and 7d. on the amount of such instalment, and the surety is not entitled to have the whole dividend applied in discharge of that instalment, but only ratably in part payment of each instalment as it becomes due. See further Williams v. Rawlinson, 3 Bing. 71. The fact that a payment was made to a creditor having several demands against the same debtor, by a surety of such debtor on one of the debts, but with the debtor's own money, does not show that the debtor intended such payment to apply to the debt guaranteed. Mitchell v. Dall, 4 Gill & J. 361. In Donally v. Wilson, 5 Leigh, 329, it was held, that if A owes a debt to B, payable on demand, for which C is A's surety, and A assigns debts of others to B in part payment, and after such assignment, but before the assigned debts are collected, A contracts another debt to B, for which there is no security, B cannot in such case, after the collection of the assigned debts, apply the same to the payment of A's last debt contracted after the assignment was made, and recover the whole amount of the first debt from the surety. - A debtor cannot appropriate a payment in such manner as to affect the relative liability or rights of his different sureties without their consent. Postmaster-General v. Norvell, Gilpin, 106.

(h) Thus, where a creditor recovered one judgment on several notes, some of which were made by the judgment debtor alone, and others were signed also by a surety, and took out an execution which was satisfied in part by a levy, it was held, that he could not appropriate this payment solely to the notes not signed by the surety, but that all the notes were paid proportionably. Blackstone Bank v. Hill, 10 Tick. 129. So where an insolvent debtor assigns his property for the benefit of such of his creditors as become parties to the assignment, and thereby releases their claims, and a dividend is received by one of such creditors, it must be applied ratably to all his claims against the debtor, as well to those upon which other parties are liable, or which are otherwise secured, as to those which are not so secured. "This is not a case," say the court, "in which the debtor or creditor has the right to make the application of any payment, for the application is made by law according to the circumstances and justice of the case." Commercial Bank v. Cunningham, 24 Pick. 270. See also Merrimack County Bank v. Brown, 12 K. H. 320; Waller v. Lacy, 1 Man. & G. 54. But see, contra, Portland Bank v. Brown, 22 Me. 295.

One holding a note on which interest is payable annually or semi-annually, may sue for each instalment of interest as it becomes payable, although the note is not yet due. (j) Although it has been held that after * the principal becomes due the unpaid instalments of interest become merged in the principal, and must therefore be sued for with the principal, if at all, (k) the better reason is that the promises to pay the principal and interest at different times are several and afford distinct causes of action. (kk) l And if he allows the time to run by without demanding interest, he cannot afterwards, in an action on the note, recover compound interest. (l)