This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Payment is presumed to be made in money unless an intent to the contrary is shown.1 If something other than money is delivered by the debtor to the creditor it is possible that it may be delivered as absolute payment on the one hand or as collateral security or conditional payment on the other. If there is an agreement that it is taken as payment, it has such effect.2
6 St. Paul National Bank v. Cannon, 46 Minn. 95; 24 Am. St. Rep. 189; 48 N. W. 526; Kohl v. Beach, 107 Wis. 409; 50 L. R. A. 600; 83 N. W. 657.
7 Hill v. Arnold, 116 Ga. 45; 42 S. E. 475.
8 Bull v. Fuller, 78 la. 20; 16 Am. St. Rep. 419; 42 X. W. 572.
9 Lopez v. United States, 24 Ct. CI. 84; 2 L. R. A. 571.
10.Rasmussen v. Carbon County, 8 Wyom. 277; 44 L. R. A. 295; 56 Pac. 1098. Contra, Coughlin v. McElroy, 74 Conn. 397; 92 Am. St. Rep. 224; 50 Atl. 1025. (An action by the de jure officer against the de facto officer.)
1 Fell v. Poultry Co., 69 N. J. L. 429; 55 Atl. 236.
2 Railroad bonds. Reynolds v. RyT 143 Ind. 579; 40 N. E. 410. County warrants and promissory notes. Pasewalk v. Bollman, 29 Neb. 519; 26 Am. St. Rep. 399; 45 N. W. 780. Note of one of joint-debtors. Shee-hy v. Mandeville, 6 Cranch (U. S.) 253. Check of debtor. La Fayette County Monument Corporation v. Magoon, 73 Wis. 627; 3 L. R. A. 761; 42 N. W. 17. Check of debtor in hands of bona fide holder. Na-
On the other hand it may be understood between the parties that it is delivered not as payment, but as collateral security.3 It is a question of fact whether the thing delivered by the debtor to the creditor is delivered as payment or not.4 Thus where a mortgagor gives his bond for an overdue payment on a mortgage debt,5 or notes of a third person,6 as where the note of a third person is given for an indebtedness under a building contract,7 the question is ultimately one of fact. Railroad coupons secured by first mortgage, which are accepted at par in buying third mortgage bonds at sixty cents on the dollar, the interest on which is guaranteed by a third party, are to be considered as paid.8